Economist Peter Schiff challenged the bitcoin return assumptions underlying Strategy Inc.'s preferred-stock financing model, arguing that recent price declines undermined expectations of sustained appreciation needed to support dividend payments.
Writing on November 12, Schiff stated that Strategy's strategy behind its STRC preferred shares assumes bitcoin owned by the company will appreciate 30% annually, allowing it to pay STRC shareholders a 12% annual yield while remaining profitable. However, he noted that bitcoin lost 6.5% last year and has declined 17% year to date, questioning the basis for the 30% assumption.
As of November 12, bitcoin traded near $70,900, down 18.93% year to date. The price had fallen 3.74% over 24 hours, 6.53% over seven days, and 14.52% over a month, and was 30.10% below its level a year earlier.
Strategy's founder and executive chairman Michael Saylor has projected average annual bitcoin appreciation of approximately 30% over 20 years, according to a June 2025 CNBC interview. In an October 13 Bloomberg interview, he forecast annual growth of 20% to 30% over the next two decades. Both projections described long-term price appreciation.
Understanding STRC's Dividend Structure
Strategy's variable STRC dividend rate stands at 12% annually, calculated on a $100 stated amount per share. At that rate, payments total $12 per year. Shareholders approved daily dividend accrual in October, with dividends accumulating each calendar day beginning November 1, including weekends and holidays, with payments processed on business days.
Owning STRC gives investors a claim on the issuing company, while direct bitcoin ownership gives the holder the cryptocurrency itself. Bitcoin price appreciation can increase Strategy's asset value, but unrealized gains do not automatically produce cash for dividends. Payments require corporate cash, which can come from financing or asset sales.
Funding Dividends Through Bitcoin Sales
Strategy disclosed approximately $431.8 million in bitcoin sales during 2026 to fund part of its preferred dividends and STRC repurchases. The company reported $5.07 billion in dollar assets as of October 25, which it said covered approximately 3.4 years of dividend and interest obligations.
During November 2-8, Strategy's latest bitcoin purchases and STRC buybacks included $81.9 million for 1,036 BTC and $188.3 million for preferred shares, both financed through common-stock sales. Holdings reached 850,364 BTC, acquired for $64.16 billion. As of November 8, its designated dollar reserve for preferred dividends and debt interest totaled $4.77 billion, alongside $146.2 million in separate cash.
Charles Schwab identified earnings volatility and potential liquidity pressure as risks associated with bitcoin treasury strategies. Liquidity pressure refers to difficulty meeting cash obligations when cryptocurrency holdings lose value.
