Garlinghouse: Bullish on Bitcoin, Faults MicroStrategy Leverage

On June 26, Ripple CEO Brad Garlinghouse said he remains bullish on bitcoin, calling it “digital gold,” and blamed MicroStrategy’s financing tactics for adding pressure to the crypto market. He tied the company’s borrowing and preferred-stock structure to recent market strain.

Garlinghouse described bitcoin as a long-term store of value and compared the logistics of moving physical bullion with moving bitcoin. He noted that transferring roughly $300 billion in gold can take years and cost billions, while moving the same value in bitcoin is faster and less costly. “I’m bullish on bitcoin,” he added, and said long-term value depends on utility at scale.

He criticized MicroStrategy’s use of leverage linked to its bitcoin accumulation, saying it magnified losses as prices fell. Garlinghouse pointed to STRC, MicroStrategy’s perpetual preferred stock, which pays an 11.50% annual dividend that is adjusted monthly to target a $100 par value. At the time of his remarks he noted STRC was trading about $25 below par.

Garlinghouse singled out a sale earlier this year in which MicroStrategy sold 32 BTC to help fund preferred-stock dividends, a deviation from its prior accumulation strategy. The company later reported purchases that exceeded the amount it had sold. He argued that the company’s financing choices distracted from other priorities and added stress to the market.

Garlinghouse reiterated that he wants bitcoin to succeed and has previously cited forecasts projecting higher prices as institutional adoption grows and macro conditions change. He distinguished the asset’s role as a store of value from the risks he associates with specific corporate balance-sheet strategies.

Brad Garlinghouse is chief executive of Ripple, a payments and blockchain company. MicroStrategy has used financing instruments and preferred shares to increase its holdings of bitcoin. The comments reflect ongoing debate among executives and investors over bitcoin’s market role and the effects of corporate borrowing practices.