TLDR
- Strategy purchased 430 Bitcoin for $51.4 million, boosting its Bitcoin stash to $46.15 billion.
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The company’s approach could lead to stock dilution if Bitcoin prices fall, according to experts.
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Strategy’s use of mNAV as a metric for stock management raises concerns about further dilution.
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Experts warn that the company could face a financial spiral if its stock continues to decline.
In a new update, Strategy revealed its decision to purchase 430 more Bitcoin, worth about $51.4 million, at an average price of $119,666. This purchase increases the company’s Bitcoin holdings to 629,376 coins, valued at $46.15 billion. Strategy’s Bitcoin strategy, which has been heavily criticized in some quarters, has raised both eyebrows and concerns, particularly around its approach to managing its equity alongside its growing cryptocurrency assets.
While the company’s chairman, Michael Saylor, emphasized that this strategy gives the company more flexibility in managing its stock and Bitcoin holdings, some experts warn that it could trigger a dangerous cycle of debt and dilution. As part of the plan, Strategy uses a metric called market net asset value (mNAV), comparing the company’s share price to the value of its Bitcoin holdings. However, critics argue that this approach could set the stage for further stock dilution if Bitcoin prices falter.
Strategy Equity Guidance and Bitcoin Strategy
In a bid to manage its Bitcoin holdings more effectively, Strategy unveiled its latest equity guidance plan. Under the plan, the company will issue shares based on its mNAV. If the stock trades at four times its mNAV, Strategy plans to aggressively issue new shares to buy more Bitcoin. If the stock price falls to between two-and-a-half and four times its mNAV, the company will still issue shares but with more caution.
However, once the stock drops below two-and-a-half times its mNAV, Strategy will sell shares not only to buy Bitcoin but also to cover other costs, including debt interest and preferred equity dividends. This strategy could place the company in a precarious financial position if stock prices continue to decline, according to critics.
If the stock price falls below 1x mNAV, Strategy may resort to borrowing money to buy back its stock. This potential downward spiral could lead to severe dilution, further weakening the company’s financial position, experts warn.
Experts Express Concerns Over Strategy’s Bitcoin Model
Many in the financial world have voiced concerns about Strategy’s heavy reliance on issuing shares to fuel its Bitcoin buying. Dom Kwok, co-founder of blockchain education company EasyA, is among the most vocal critics. He cautioned that this could trap Strategy in a cycle where every round of stock issuance leads to further dilution, weakening shareholders’ stakes.
potential spiral of doom looming for @MicroStrategy:
– sell $MSTR shares to service debt
– dilute shareholders further each time
– shares become worth less
– interest payments mount
– $MSTR sell its bitcoin to pay interesthow do you think this ends? https://t.co/BfMPH4JHfo
— Dom | EasyA (@dom_kwok) August 19, 2025
The cycle, Kwok argues, could eventually force the company to sell some of its Bitcoin holdings to cover its debts. As a result, Strategy’s aggressive Bitcoin strategy, coupled with its reliance on share issuance, may have unintended consequences, creating a vicious cycle that harms the company’s long-term stability.
In addition, other critics have labeled Strategy’s approach a “Ponzi” scheme, with concerns that it is only sustainable as long as the company continues to issue more shares. Market commentator Operation Danish and crypto community figure Based16z echoed similar fears, suggesting that the company’s reliance on stock issuance to acquire Bitcoin could eventually backfire.
Bitcoin’s Role in Strategy’s Financial Strategy
Despite the criticism, Strategy continues to hold the world’s largest corporate Bitcoin reserve. The company’s aggressive approach to Bitcoin investment has been a key part of its strategy under Michael Saylor’s leadership. He remains a strong advocate of Bitcoin, believing that it offers the best long-term store of value.
However, the company’s reliance on Bitcoin’s price appreciation to fund its stock issuance has led to concerns that a downturn in Bitcoin’s price could cause severe financial distress. Experts caution that while Bitcoin remains a strong asset, Strategy’s model may not be sustainable if Bitcoin’s value drops or becomes more volatile.
Strategy’s Bitcoin holdings have thus far delivered a 25.1% return for the year, but concerns linger about the sustainability of its investment approach. As the company’s equity guidance plan continues to unfold, both shareholders and analysts will closely monitor the effectiveness and risks of this strategy.
