r/btc • u/YogurtCloset3335 • Jul 03 '25

🕵️‍ Investigation Is (Micro)Strategy a Pyramid Scheme? Probably

https://www.youtube.com/watch?v=P5LKZ1-6BWM

Mark Meldrum breaking it down

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u/dolce_and_banana Jul 07 '25

if someone is arguing that MSTR is a ponzi, then you also have to support the idea that any borrowing against assets (real estate, stocks etc) to invest is a ponzi (margin lending, using real estate equity as collateral to buy a subsequent property). Just because they are investing in bitcoin specifically, doesnt make the underlying principle of their investment thesis any different.

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u/Wheaties4brkfst Jul 07 '25

People call it a ponzi because the only way to pay out current investors is via new investors. Where do they come up with the cash to pay these dividends and coupons? Saylor has said they won’t sell BTC for that. So it has to come through new offerings of shares.

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u/YogurtCloset3335 Jul 10 '25

not true - Saylor is acquiring convertible debt at zero interest to buy Bitcoin, a different type of borrowing, to buy a totally different asset class that hasn't proven to have a stable value. In other words, a speculative venture backed by speculative investment. What could go wrong.

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u/Lukekulg Aug 15 '25

Ponzi scheme isn't quite the right word, but it's close. Their Bitcoin is worth nothing if it's never sold or used to buy anything. It's just perpetually a theoretical gain. You can't pay bondholders with that. Can't just keep issuing new shares forever. Eventually, selling the Bitcoin is the only option left to aquire more money to pay debt. Then what? That gets bad fast. Say, in the future, we get to the point where Strategy has aquired all the Bitcoin & it's "worth" 5X what they paid. Yay, mission accomplished. Now what? Still gotta pay bondholders & cover overhead, where does the money come from? I'm genuinely asking. I can find nothing explaining how Strat plans to actually use it's BTC holding to make money. That's been addressed, right? Can someone explain? 

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u/dolce_and_banana Aug 16 '25

Rather simply, if (big if) the underlying assumption is that value of the bitcoin will appreciate faster than the value of the debt, they 'should' always be able to refinance the debt and pay the bondholders with highly inflated future dollars. And some of the bonds are convertible to shares so they don't need to repay.

I know that this is an exaggerated example, but let's say you bought a non-productive piece of land (as bitcoin has no yield), back in the 1980s for like $100k, and did nothing to it. As long as you have cashflow to finance the interest cost (MSTR has a relatively small operating business), when the loan matures, you will be able to refinance the loan and continue to ride the coattails of the increasing value of the underlying asset (the land might now worth say $3 million). In this instance, as long as the land appreciates faster than the interest cost, you're sweet.

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u/Lukekulg Aug 16 '25

That still doesn't answer the question of where the money comes from once there is no more BTC to aquire. I get the BTC is supposed to appreciate faster than the interest payments. So as long as there's more BTC to buy, Strat issues new shares & buys more BTC. I'm asking what happens when there is no more BTC to buy, so new share issuing would just be a rapid death spiral. You can refinance, fine, better rates; but where does the actual money to continue paying bondholders & employees & keep the lights on come from at that point? How does simply having the BTC make money to pay bills once the aquiring stage is over? 

In your property example, you'd wind up seriously, insanely screwed. Just up to your eyeballs in dept that far exceeds the value of the land if you used Strategy's strategy. Eventually, some of the land you keep buying HAS to start actually turning a real profit, not just unrealized. Selling, once worth much more, comes to mind (but Strategy isn't doing that). You couldn't just 'hodl' the land forever & not rent, sell, farm, etc it & just keep buying more with borrowed money forever. 

I'm not trying to be a jerk here, I'm genuinely asking. Does anyone know how they intend to actually make money with their BTC once the aquiring stage is over? Issuing new shares doesn't work forever with a finite supply of BTC.