Woofun AI reports that Peter Schiff, CEO of Euro Pacific Capital, has intensified his attack on Strategy (Nasdaq: MSTR) and its leader Michael Saylor, labeling the firm’s operational model a Ponzi scheme that has entered a precarious middle stage.

The core of Schiff’s argument targets the mechanism behind Strategy’s expansion. The company funds its Bitcoin purchases through preferred stock sales rather than organic earnings. This structure relies on continuous capital inflows from new investors to acquire an asset that generates no cash flow or earnings. Schiff contends that this dependency creates a structurally unsustainable loop, where the appearance of growth is maintained only by fresh equity injections. Without such inflows, the model lacks internal revenue to support its asset accumulation strategy.

A critical juncture is predicted when the obligation to pay dividends on STRC preferred stock becomes financially impossible. At that point, Michael Saylor will face a binary choice: liquidate Bitcoin holdings to raise cash or sell off preferred shareholder equity. Schiff asserts that either path leads to structural collapse. The inability to service fixed dividend payments without divesting core assets signals a fundamental flaw in the capital structure, according to this critique.

This criticism is part of a long-standing narrative from the gold advocate, who has repeatedly characterized Bitcoin as a bubble. Strategy, holding over 200,000 Bitcoin on its balance sheet, has become a primary target for such skepticism. The firm’s allocation of significant corporate treasury assets to cryptocurrency draws sharp contrast between crypto bulls, who praise the strategy, and skeptics who view it as reckless. The scale of holdings amplifies the visibility of these divergent viewpoints.

Woofun AI data shows that the reliance on preferred stock introduces fixed obligations that do not correlate with Bitcoin’s price volatility. While MSTR common stock has rallied alongside Bitcoin, the preferred shares carry a dividend burden that must be met regardless of asset performance. If Bitcoin’s price declines or stagnates, the cost of maintaining these obligations becomes untenable. This financial engineering risk is often overlooked by retail investors who focus on the upside of common equity.

The preferred stock structure acts as a lever that can amplify losses for shareholders if Bitcoin does not appreciate. Schiff argues that the current model is vulnerable to market downturns, where the fixed costs of dividends outpace any gains from the underlying asset. This dynamic creates a scenario where shareholders bear disproportionate risk relative to potential rewards. The structural fragility is exacerbated by the lack of cash-generating assets to offset these liabilities.

The debate underscores the deepening divide between Bitcoin proponents and traditional financial skeptics. Schiff’s provocative "Ponzi scheme" label raises legitimate questions about using debt-like instruments to fund volatile asset purchases. Investors in MSTR must weigh the upside potential against the structural risks highlighted by this analysis. The middle stage of the strategy may ultimately test its resilience against market realities.