Peter Schiff has a message for Bitcoin bulls. Buy BTC itself, he says, not Michael Saylor's Strategy stock. The company sold $544.5 million of MSTR shares last week. It bought no Bitcoin.
Schiff points to one number. MicroStrategy's Bitcoin Yield has fallen to 4.5% this year, he says. It stood at 13.3% in late May.
Bitcoin Yield sounds complicated. It is not. It tracks how much Bitcoin sits behind each MSTR share.
Sell new shares without buying coins, and the number drops. That is exactly what happened last week.
Strategy sold 5,429,160 MSTR shares. It raised $544.5 million. It bought zero bitcoin, its 8-K filing shows.
Holdings sit at 843,775 BTC. The yield was 9.4% on May 3. It climbed to 13.3% by May 25. Schiff now puts it at 4.5%.
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Here is the part few people noticed. Strategy warned about this outcome itself, in its own first quarter filing.
Put simply, more shares without more Bitcoin turns the yield negative. BeInCrypto covered the trade-off facing MSTR investors earlier on Monday.
Strategy also bought back some of its own preferred shares, known as STRC. STRC is a special class of share. It pays holders a fixed 12% cash dividend every year. It is designed to trade at $100. Strategy paid an average of $86.52 instead. It spent $25 million and retired 288,930 shares.
Now compare that to the whole bill. Strategy owes about $1.76 billion a year in dividends and loan interest, it disclosed on June 29. The buyback trims less than 0.2%.
Another $975 million is available. Strategy will not sell new STRC below $100. It also cannot use its cash reserve to fund buybacks. It may sell bitcoin instead.
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The cash pile is growing fast. It rose from $2.55 billion on June 28 to $3.75 billion on July 26. That covers roughly 25 months of dividends, up from 17.4 months.
The Bitcoin tells a harder story. Strategy paid an average of $75,476 per coin. Bitcoin's current price is near $64,762. The gap is about $8.9 billion.