Michael Saylor defended Strategy’s bitcoin-backed credit model after critics argued that the company’s STRC earnings structure resembled a Ponzi scheme, saying the business was built on monetizing capital gains from bitcoin rather than relying on a perpetual share issue.
Speaking in an interview subscriber Via This statement attracted attention because Saylor has long been associated with the phrase “never sell your bitcoins.”
According to Saylor, a more accurate formulation is that the strategy does not intend to be a “net seller” of bitcoin.
“I’m very famous for saying, ‘Never sell your bitcoin.’ That’s why the internet went crazy when we said we might sell it,” Saylor said. “But if I were more precise, I would say never to be a net seller of bitcoin. It would not have been very popular or attractive to say I will never be a net seller of bitcoin.”
Why the strategy is not a Bitcoin Ponzi scheme
The issue became controversial after that Peter Schiff and other critics He suggested that the strategy’s willingness to sell Bitcoin to support STRC’s earnings revealed a weakness in the model. Saylor rejected this framework, saying that a company’s balance sheet should not be treated as if its bitcoin holdings were unusable or worth zero.
“If you have something worth $65 billion and people want to value it at zero, that’s not a good thing,” he said. “We don’t want the credit rating agencies to think the company has $0 in assets. We want the credit rating agencies to think we have $65 billion in assets.”
The basic model is straightforward: The strategy issues credit, uses the proceeds to buy bitcoin, and expects the asset’s long-term appreciation to exceed the cost of earnings, Saylor said. He compared the structure to a real estate development company that raises capital through credit, acquires land, improves it, and then monetizes appreciation through sales, leasing, or refinancing.
“What we want to do is we want to leverage the business model of selling credit to make a capital investment in an asset, like bitcoin, digital capital,” Saylor said. “Capital investment accumulates faster over time than dividends. We then monetize the capital gains and pay dividends.”
This distinction is central to Saylor’s response to Ponzi allegations. In his view, critics confuse the sale of common stock to fund dividends with the broader economic structure of the company. He said the strategy has historically used MSTR shares, which he described as a derivative of bitcoin that typically trade at a premium to bitcoin, to fund dividends. But the company now wants the market to understand that it can also use the estimated bitcoin directly.
This does not mean the strategy expects to reduce its position in Bitcoin, Saylor said. Even if the company sold bitcoin in exchange for dividend payments, issuing its credit would allow it to buy far more bitcoin than it sells, he said.
“If we sell Stretch, if we issue extended credit equal to 2.3% of our Bitcoin holdings, that means we will be a net buyer of Bitcoin forever, even if we sell Bitcoin to pay dividends,” he said. “Another point is that if Bitcoin rises in value by 2.3% a year, we can pay dividends forever, right? And continue to increase in value, right? And we can do that without selling any common shares.”
He added that Strategy sold $3.2 billion of STRC in April, while monthly earnings requirements range from approximately $80 million to $90 million. In this scenario, he said, the company would effectively “buy 30 bitcoins and sell 1 bitcoin,” making it a net accretion.
The interview also directly addressed Schiff’s criticism. Saylor said Schiff’s objection begins with his rejection of bitcoin itself, which makes it unlikely that he would accept a credit instrument built on it.
“Peter thinks Bitcoin is a Ponzi scheme. Peter’s not really into anything in this space,” Saylor said. “Bitcoin is digital capital, and we created a digital treasury company by selling stocks and credit instruments to buy capital. I believe Bitcoin will endure because it represents economic wealth in symbolic form with full ownership rights to the world.”
Saylor described STRC as a form of “Digital credit“Designed to eliminate some of Bitcoin’s volatility while producing a defined return. He said the strategy over-collateralizes the instrument, as the company sells “for every $5 of Bitcoin” “$1 of credit.”
“If you don’t recognize the legitimacy of Bitcoin, you will never recognize any derivatives on top of it as legitimate,” he said. “But for those people who think of Bitcoin as digital capital, as a store of economic wealth in tokenized form, what we are doing is very clear.”
At press time, Bitcoin was trading at $80,929.
Featured image from YouTube, chart from TradingView.com
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