Ethan Carter
The financial strategy of Strategy, a company with a staggering $64 billion bitcoin treasury led by Michael Saylor, focuses on one key goal: to acquire as much bitcoin as possible in the shortest time frame. Despite showing significant financial losses for two consecutive quarters, the company continues to pursue its aggressive acquisition strategy, even as the price of bitcoin remains significantly below its all-time high of $125,000 reached in October of the previous year. In 2026, Strategy has maintained a steady influx of funding sources, enabling continued bitcoin purchases.
In its first-quarter earnings report for 2026 released recently, Strategy disclosed a net loss of $12.54 billion, following a staggering $17.44 billion loss in the last quarter of 2025. A significant portion of these losses stems from unrealized declines tied to bitcoin prices. Remarkably, the company has yet to sell any of the bitcoin it has acquired; however, it appears to be increasingly open to the idea of future sales. Currently, its holdings total 818,334 bitcoins, representing approximately 3.9% of the global bitcoin supply, with a market value of $64.14 billion at the current price of around $78,000.
Despite facing substantial unrealized losses, the company that pioneered the corporate bitcoin treasury model utilized its earnings report to emphasize the performance of its innovative digital credit product known as Stretch or STRC. This product is a Variable Rate Series A Perpetual Stretch Preferred Stock that allows investors to purchase shares of preferred equity. The funds raised through this mechanism are directly funneled into bitcoin purchases. Investors benefit from variable-rate dividends that are supported by the firm’s bitcoin assets, which are expected to appreciate significantly over time. So far in 2026, this instrument has attracted $5.58 billion, contributing to over $8 billion since its launch nine months ago.
In simpler terms, Strategy is currently borrowing funds at an interest rate of 11% per year and utilizing those funds to acquire bitcoin, based on the belief that the value of this cryptocurrency will rise by more than 11% annually. This positions the company as a leveraged investment on bitcoin. However, it is worth noting that previous funding approaches had significantly lower borrowing costs.
“Strategy is the leading issuer of Digital Credit globally, boasting over $13.5 billion in outstanding preferred equity, all backed by a robust bitcoin balance sheet,” stated Strategy CFO Andrew Kang. “Our consistent track record of meeting our dividend obligations is a point of pride, as we have successfully fulfilled our payment commitments on time and in full across 23 consecutive distributions, totaling over $693 million since launching our preferred equity products in early 2025.”
Although the unrealized losses have attracted significant criticism, Strategy focuses on increasing its bitcoin holdings per share instead of pursuing dollar-denominated quarterly earnings. The firm evaluates its success based on metrics such as BTC yield, which reached 9.4% in the initial four months of 2026, during which it added approximately 63,410 bitcoins to its treasury. Company executives confidently assert that bitcoin will continue to solidify its status as a global, apolitical reserve asset, leading to an increase in value over the long term.
Strategy CEO @phongle refuted my claim that $STRC is a Ponzi scheme by arguing it’s “transparent” and “very clear what we’re doing.” But I never accused Strategy of hiding the scheme. In contrast, I called STRC the most obvious Ponzi precisely because $MSTR is so open about it.
— Peter Schiff (@PeterSchiff) May 3, 2026
Critics of Strategy’s overall methodology are plentiful, with some labeling it as an outright Ponzi scheme. Peter Schiff, a well-known advocate for gold and a bitcoin skeptic who leads Euro Pacific Capital and accurately predicted the 2008 housing crisis, has described Strategy’s STRC product as “the most obvious Ponzi scheme.” He insists that just because the company is transparent about its operations does not exempt it from the possibility of being a Ponzi scheme.
Moreover, Strategy has drawn comparisons to investment trusts that surged in popularity during the stock market boom of the 1920s, which ultimately contributed to the catastrophic collapse in 1929. These investment vehicles employed high levels of leverage to acquire shares of emerging technology companies. This analogy has gained traction following the publication of Andrew Ross Sorkin’s recent book 1929, which chronicles the events leading to that financial disaster. However, it is crucial to note that Sorkin himself has refrained from asserting that Strategy is on a similar trajectory toward devastating failure.
The sustainability of this model through upcoming crypto cycles or its potential collapse in a manner akin to a Ponzi scheme remains an unresolved question. Yet, for the time being, investors continue to provide the necessary capital that enables Strategy to expand its bitcoin reserves.
Daniel Mercer
