CoinShares Criticizes MicroStrategy’s Bitcoin Strategy

CoinShares has criticized MicroStrategy’s decision to pursue $42 billion in Bitcoin acquisitions, suggesting that the company should focus more on financial stability and bond attractiveness. MicroStrategy plans to fund the purchases by selling shares steadily over the next three years.

Analysts believe the plan’s success will depend on various elements, including previously raised concerns, regulatory developments, and the company’s debt management. CoinShares specifically noted the impact of rising bond interest rates, which increase MicroStrategy’s regular payments.

Analysts also identified possible tax burdens as a risk, stemming from a proposed tax on unrealized crypto gains or the potential need to sell Bitcoin assets to cover debt obligations. CEO Michael Saylor, however, has ruled out any sale of Bitcoin.

The proposed tax on unrealized gains is unlikely to pass anytime soon, especially if Republicans gain Senate control after the elections,

commented The Coinomist analyst Anton Kryshtal.

CoinShares further indicated that MicroStrategy’s current revenue might not be enough to meet upcoming interest obligations, with previous financial actions likely insufficient for future needs. Nonetheless, investors continue to trust the company, channeling substantial funds its way.

A prominent Wall Street broker recently called MicroStrategy shares the best choice for traditional investors looking to invest in Bitcoin, though U.S.-based spot Bitcoin ETFs launched in early 2024 offer an alternative option.