Strategy pays retail investors 11.5% in depreciating fiat while accumulating Bitcoin with no proof of reserves and no redemption right. 80% of holders are retail.
It may not be a Ponzi, rather, the structural argument is that STRC rebuilds a Cantillon Effect on top of Bitcoin. The entity closest to accumulation holds the scarce asset while the participants furthest from it hold claims in the depreciating one. I traced the full capital structure from SEC filings and the prospectus.
Full sourced analysis: https://daniella.io/bitcoin-strc
This also sounds like Gresham's Law.
I think it would reasonably be a ponzi-like scheme if dollars were actually scarce, and the two currencies were roughly equivalent in issuance. But if you assume they actually keep producing dollars at a rate of 7%+ per year, then it just seems more like a speculative attack on the currency.
Good framing. Gresham's Law does apply here. Strategy spends the bad money and hoards the good, which is rational. The article's focus is on the other side of that trade: STRC holders gave up dollars that could buy bitcoin to receive payments in the currency being debased. From Strategy's side it's a speculative attack on fiat, but from the STRC holder's side it's the other side of that coin.
no, it doesn't. I will die on this hill.
#738907
no
MSTR can print infinite shares and sell them to the market in order to buy Bitcoin until their shareholders say no mas.
We will see when that occurs.
And we will see this in real time as the MSTR stock price trends to zero. But so far investors like MSTR buying Bitcoin for them as silly as that sounds.
This is dumb. People don’t have to buy STRC they can buy the bitcoin. This is an absurd analogy.
Right, and that's the core of the article. The question is why choose fiat yield over just buying bitcoin directly? Especially when roughly 80% of STRC shares are held by retail investors who could do exactly that.
Because our bills are dominated in dollars. A lot of people LARP as Bitcoin only but it’s impossible.
Last year July the price was at $118k today it’s at $66k. The purchasing power of the Bitcoin got nuked. Thus people don’t want to deal with that.
So all MSTR is doing is saying hey we will deal with that give us your fiat we will buy the bitcoin and pay you a dividend (which they can stop at anytime!) and we will take the downside risk and capture all of the upside gains as well.
For some people they like this risk profile and buy the STRC others hate it. Think Saylor is running some sort of scam.
Meanwhile Bitcoiners will put their money in high yield savings account or money market fund and say it’s safe. Meanwhile the Fed who prints casino chips and buys bonds that prop up these cash accounts in the open market to prop up bond prices (and lower yields) is safer than STRC. But this is the true cantillon effect because no one else can buy/create the fed casino chips and buy a government debt haha.
And this is why bitcoiners talk themselves into pretzels in this fiat hellscape.
You're describing exactly why the transition is hard, and I agree that it is. I lived through it the past 18 months hands-on. The marketing article in this series covers that tension and my experience directly: https://daniella.io/bitcoin-marketing/
The point about the Fed and money markets is fair, that is the original Cantillon effect. The article's argument is that STRC reconstructs that same geometry on top of bitcoin since the entity closest to the accumulation point holds the scarce asset, and fiat obligations flow to the participants furthest from it. Both can be true at the same time.
The difference is whether we choose to participate in rebuilding that pattern or not. Living on a bitcoin standard today is difficult, I'm not pretending otherwise (really). But choosing STRC is choosing to fund the reconstruction of fiat mechanics on top of the protocol built to end them. I think the transition just asks us to be honest about that cognitive dissonance, even when it's uncomfortable; to make conscious personal choices.
This is false. Anyone can buy bitcoin!! Both can’t be true if no one is locked out from buying bitcoin! No one needs Saylor. But banks NEED collateral. Which comes in the form of US debt which the Fed can buy with bank reserves!
People can’t buy bank reserves!!
This where your “both can be true” argument blows up!
You're right that anyone can buy bitcoin, and that's a real difference from the Fed system. The article says that explicitly: "No money is printed, no outsider is diluted, and every STRC buyer participates voluntarily and is paid for it." The Cantillon reconstruction isn't about access but the distribution pattern that results. STRC holders could buy bitcoin directly but instead chose to fund Strategy's accumulation in exchange for fiat yield. The geometry ends up the same even though the entry point is open, but I hear your point and yes I acknowledge where the analogy breaks down.
some investors want fixed dividend
it’s called a diversified portfolio
Of course, the article doesn't argue people shouldn't want yield. The question it raises is what it means to receive that yield in fiat while the company keeps the bitcoin. In this case 'diversification' is into a depreciating currency with no claim on the appreciating asset.
naaaah.... it's a ponzi.
I don't think it's a ponzi, unless it's not actually backed by bitcoin. The cash flow mechanic where new capital funds existing obligations is structurally similar, but STRC holders voluntarily buy a disclosed security backed by (not publicly verifiable for now) bitcoin. My research led me to a clear Cantillon effect, but only time will tell.
it's not a fraud; as you say, it's all done in the open. But the financing is still ponzi
I hear you ;)
12%
In effect, I've been writing the articles over the past few months and they were fully up to date when I first published them a few days ago. The numbers will certainly fluctuate over time (e.g. Total Bitcoin held by Strategy) but the argument is still the same. If the thesis changes I will update it.
MicroStrategy applies financial engineering similar to MEFO Bonds, issuing low-cost debt and future promises through an intermediary corporation to absorb immediate liquidity.
Can’t tillion
The most important detail buried in the analysis is the six to seven month reserve runway. That is not a safety margin. That is a countdown timer. Every month that STRC trades below par, the ATM program cannot operate effectively, and the company must draw down cash to meet the dividend obligations. The cash reserve is not a buffer. It is the fuel for the yield machine when new issuance stalls. Once it is gone, the only remaining source of cash flow is selling Bitcoin or the software business, and the software business is negligible relative to the scale of the preferred obligations.
The convertible debt deserves more scrutiny in this context. Six point seven billion dollars of debt with maturities starting in 2028. The coupon rates are low, but the principal repayment obligations are absolute. The company is accumulating Bitcoin on leverage while simultaneously issuing preferred stock that creates ongoing cash obligations.