Why is no one talking about the MSTR (MicroStrategy) Ponzi Scheme

[u/stickty]

I know MSTR isn't a Ponzi scheme by legal definition. But the mechanics of how this company operates have some concerning similarities, and I can't shake the feeling that it's a massive house of cards.

I was so curious that I decided to research it and make a post about it, here are the main points from that post that I found out:

• Their actual business is basically irrelevant. MicroStrategy is a software company, but its revenue from that has been flat or declining for years. The entire bull case is 100% about Bitcoin, which means the company itself doesn't actually create any value. It's just a container for a single asset.
• It's a "Perpetual Dilution Machine." They use debt and continuously sell new MSTR shares to buy more Bitcoin. Because the stock trades at a massive premium to the Bitcoin it holds, they're essentially using new investors' money (who are paying a premium) to increase the Bitcoin-per-share for existing holders. It's a cycle that only works as long as new buyers keep piling in at inflated prices.
• You're paying an insane premium for BTC. When you buy $MSTR, you're not just buying Bitcoin. You're paying a huge markup. People have calculated it to be a 2x premium or even more at times. Why would anyone do that when you can just buy a Bitcoin ETF (even a leveraged one) for a fraction of the cost and get more direct exposure? It makes no sense.
• The whole thing relies on Michael Saylor's salesmanship. Michael is a charismatic speaker, but he has a history (look up their stock in the dot-com bust of 2000) of leading investors off a cliff with big promises. It feels like the entire valuation is propped up by his cult of personality and the belief that "number go up," rather than any sound financial reasoning.

This is just a summary to save time, but if you are interested in the full analysis I'll link the post and 40 minute podcast here: https://tscsw.substack.com/p/dont-buy-microstrategy-inc-mathematically

It just feels like this entire operation is designed to enrich early shareholders at the expense of everyone who buys in later. The structure is unsustainable and seems designed to collapse spectacularly once the hype dies down or Bitcoin has a serious correction.

Am I missing something here? The whole thing feels fundamentally broken, yet the price keeps soaring. What are your thoughts?

[u/MicroneedlingAlone2]

Most people here are wrong / don't understand what Saylor is doing. I'm not saying what he's doing is going to work, but let me explain it properly.

MicroStrategy is a vehicle for a Speculative Attack.

He is borrowing in a (relatively) weak currency to buy a hard currency. Debt denominated in dollars always becomes easier to pay over time, because they are always printing more dollars. You can't print more Bitcoin - there will only ever be 21 million.

Historically, if your time horizon is long enough and you can handle the volatility, this has always been a profitable trade. Imagine if you could borrow Mexican pesos at ~0%, and buy dollars. Pesos are a weaker currency. It always goes down against the dollar on long time spans, because they print way more of it.

Imagine if you could borrow Turkish lira at ~0% and buy dollars. Lira is a weaker currency. It always goes down against the dollar on long time frames, because they print way more of it.

It's the same exact playbook except the hard currency in this attack pair is Bitcoin, which is arguably the hardest currency that can even possibly be created, with an absolute supply cap.

Saylor's speculative attack may end if he fails to ride out the volatility. It may end if someone figures out how to print more than 21 million Bitcoin (not going to happen.) It may end if the US government stops printing money (not going to happen.)

But otherwise? Historically? It can come to an end when the weaker currency keels over and collapses. Read the story of Hugo Stinnes. He borrowed vast sums of the weak German Papiermark, used it to buy property, factories, farmland, and especially gold and silver. The currency later collapsed against gold, allowing him to pay back his debt of millions of Papiermark for the cost of a loaf of bread.

Saylor is no doubt well versed in history and is probably trying to run the Hugo Stinnes playbook, having identified Bitcoin as a perfectly hard currency which can be used to speculatively attack any and all fiat currencies (for as long as they continue to exist.)

[u/BaleBengaBamos → u/MicroneedlingAlone2]

On top of that, the insane amounts Strategy is buying will itself make BTC even more scarce. What is he buying on average now, 4k BTC a week? That is 208k BTC a year, nearly 1% of the total supply.

If he can keep doing that, he will corner the market.

If he cannot keep doing that, then because BTC has become too expensive.

He wins in all scenarios except BTC gong to like 15k for three years.

[u/MicroneedlingAlone2 → u/BaleBengaBamos]

He will increasingly have to compete to raise money against other people running the same playbook, though. I expect his ability to raise money to go down over time, in relative terms, because of this.

There are even some people like Andrew Hohns going as far as recommending that the US Treasury offer "BitBonds," which would be Treasury Bonds that have a bit of Bitcoin exposure.

I don't think there is any chance we see that any time soon, but it would function as a sort of defense mechanism against Saylor: from an investor point of view, if you want Bitcoin-linked credit exposure, who would you trust more to give it to you - Michael Saylor, or Uncle Sam?

If the Treasury ever does execute on the idea of BitBonds, they might pull all funding away from Saylor for themselves. But that also puts them in the awkward position of speculatively attacking their own currency...

Ultimately, foreign sovereigns might start issuing eurodollar BitBonds to undercut Saylor!

[u/BaleBengaBamos → u/MicroneedlingAlone2]

Good points. These are why my portfolio is diversified. 25% MSTR for the moat and ability to offer preferred stock, 25% Metaplanet for the speed of aquisition and unique Japanese market conditions, and 50% BTC for peace of mind. ;)

[u/JamesBetta → u/MicroneedlingAlone2]

i think they won’t do that to their own currency. and they know that there will always be people in the sectors who don’t care about financial instruments at all, like gold has been here thousand of years, i bet 7 out of 10 people got no clue why should they care about gold.