MicroStrategy (NASDAQ: MSTR), now rebranded as Strategy, is facing renewed scrutiny after prominent Bitcoin critic Peter Schiff identified what he calls a serious liquidity risk.
On a recent episode of The Peter Schiff Show, titled “The Debt, the AI Bubble, and Strategy’s Liquidity Crisis… It’s All Connected,” Schiff focused on the company’s buyback of zero-coupon convertible notes at 92 cents on the dollar.
Strategy’s executive chairman Michael Saylor described the transaction as accretive to shareholders, but Schiff argued the move signals deeper financial pressure behind the scenes.
Schiff’s critique centers on the time value of money, noting that the notes carried no coupon and did not mature for another three years, though bondholders could demand repayment in June 2028.
“The notes are only worth 92 cents because there’s no interest for 2 years. If you give me 92 cents today, that’s better than giving me a dollar in 2 years because I could take the 92 cents and I can earn interest on that,” Schiff said.
By paying fair value, Schiff argues Strategy surrendered the interest it was already earning on those dollars while consuming more than 60% of the liquidity cushion built to fund preferred stock dividends.
That cushion was specifically raised to cover the 11.5% yield on Strategy’s Stretch preferred stock, known as STRC, without forcing the company to sell any of its Bitcoin holdings.
STRC currently carries a variable rate of 11.25% and has grown to $3.4 billion, representing a perpetual dividend obligation that ranks ahead of common equity regardless of Bitcoin’s price performance.
Strategy raised $25.3 billion in capital and was the largest U.S. equity issuer for the second consecutive year, while holding 713,502 bitcoins as of early February 2026.
The company’s Q1 2026 balance sheet shows $2.21 billion in cash against $8.26 billion in total debt, with intangibles of $51.65 billion representing the Bitcoin stack at fair value.
Bitcoin has not helped the situation, declining 16% year to date and 32.6% over the past year, trading around $73,300, while MSTR shares have fallen 58.3% over the trailing year and 8.3% in the past month.
Schiff was direct in questioning the rationale: “Why did he blow through that? Why did he even do that? There must have been a lot of pressure on him behind the scenes to buy back that debt.”
Prediction markets present a divided picture, with Polymarket traders assigning an 85% probability that Strategy sells some Bitcoin by December 31, 2026, while pricing the chance of an outright margin call in 2026 at just 4.5%.
Strategy’s capital stack now includes five preferred series, STRC, STRK, STRF, STRD, and STRE, all carrying dividends that rank ahead of common equity and continue accruing regardless of Bitcoin’s market performance.
The company’s debt-to-equity ratio stands at 0.18x in Q1 2026, but that equity denominator is almost entirely Bitcoin marked to market, meaning any sustained price decline directly thins the remaining financial buffer.
As of the latest available data, STRC is trading at $98.86 against its $100 stated amount, and the company disclosed roughly $8.1 billion remaining under its common at-the-money program alongside over $29 billion across preferred at-the-money programs as of February 1, 2026.
