MicroStrategy’s Bitcoin Yield has dropped sharply to 4.5% this year, falling from 13.3% in late May, a decline of 66%. This steep decrease followed the company's recent $544.5 million sale of 5.4 million MSTR shares, without using any of the proceeds to buy additional Bitcoin.
Bitcoin Yield measures how much Bitcoin backs each share of MicroStrategy. When the company issues more shares without acquiring more Bitcoin, the yield per share dilutes. This is exactly what happened last week, according to Peter Schiff, who warns investors that holding the company stock might be less advantageous than owning Bitcoin directly.
MicroStrategy's Bitcoin holdings remain steady at 843,775 BTC. The yield climbed to 13.3% by May 25 from 9.4% earlier that month but took a steep tumble after the share offering. Schiff highlights that if this trend continues, the yield could even turn negative by 2026.
The company also repurchased $25 million worth of its preferred shares, which pay a fixed 12% dividend. However, this buyback barely impacts overall costs, as MicroStrategy faces about $1.76 billion annually in dividends and loan interest payments. The $25 million repurchase translates to less than 0.2% savings.
Meanwhile, the company's cash reserves have expanded from $2.55 billion at the end of June to $3.75 billion by late July, covering an estimated 25 months of dividend obligations, up from 17.4 months previously. Yet, MicroStrategy’s Bitcoin holdings tell a tougher story: the average purchase price per coin is approximately $75,476, while Bitcoin’s current market price hovers near $64,762, creating an unrealized loss gap of about $8.9 billion.
After booking a net loss of $12.54 billion in Q1, investors await the second-quarter results set for release soon. Peter Schiff’s cautionary note stands firm those bullish on Bitcoin might find better value directly in the cryptocurrency, rather than through MicroStrategy stock.
