Economist and Bitcoin skeptic Peter Schiff has launched a scathing critique of MicroStrategy's (now Strategy) Bitcoin acquisition strategy, labeling it a "Bitcoin pyramid" due to its reliance on a novel financial instrument called STRC (Stretch Preferred Stock). At the core of Schiff's argument is the claim that the company's growing cash obligations to service STRC dividends could eventually force the first-ever forced sale of Bitcoin in the company's history.
STRC is a perpetual preferred stock designed to trade near its $100 par value and currently carries an 11.5% annual dividend yield. The instrument is marketed to conservative funds prohibited from direct crypto investment. Strategy is obligated to pay monthly dividends in dollars to STRC holders before any profits can be distributed to common shareholders (MSTR). To maintain the $100 price during market declines, the company must raise the yield, which reached 11.5% in March 2026.
Schiff argues this creates a recursive debt problem. Strategy issues STRC to raise dollars, uses those dollars to buy Bitcoin—which generates no cash flow—and must then pay the 11.5% yield. He contends this forces the company to either attract new investors (a pyramid characteristic) or deplete its cash reserves, estimated at $2.25 billion. With approximately $3.84 billion of STRC notional outstanding, the annual dividend obligation is roughly $442 million, or $36.8 million per month. Schiff warns that once cash runs out, CEO Michael Saylor will face a choice: default on the dividend, collapsing confidence, or liquidate Bitcoin holdings.
Meanwhile, Strategy's Bitcoin accumulation has accelerated dramatically. The company held 738,731 BTC as of March 8, 2026, up 66,231 coins from 672,500 at the end of 2025—a pace surpassing its full-year net purchases in 2021, 2022, or 2023. STRC has become a core funding mechanism, financing the purchase of 33,976 BTC (worth over $3.5 billion) since its launch. In the week ending March 8, STRC share sales of 3.78 million shares (approx. $377.1 million net proceeds) accounted for roughly one-third of the company's $1.28 billion at-the-market funding.
The instrument's high yield has attracted significant institutional demand, outperforming traditional alternatives like JPMorgan's perpetual preferred stock (JPM-PD), which carries a 5.8% yield. Notable holders include the BlackRock iShares Preferred and Income Securities ETF (PFF), the Fidelity Capital & Income Fund (FAGIX), Prevalon Energy, and Anchorage Digital. To meet this demand, Strategy amended its sales agreement on March 9 to allow multiple agents to sell STRC across more trading sessions, including pre-market and after-hours.
The debate extends beyond Schiff. Famed short seller James Chanos, who holds a short position in MSTR, challenged Strategy's framing of STRC as "digital credit," stating, "They're literally credit instruments denominated in fiat. What's digital is the assets, not the liabilities/preferred." Despite these criticisms, market data shows MSTR shares have outperformed Bitcoin year-to-date (down 8.3% vs. BTC's 20% decline), supporting the company's ability to raise capital. The sustainability of the model now hinges on Bitcoin's price trajectory and continued investor appetite for the 11.5% yield.
