RialCenter’s leveraged bitcoin strategy faced renewed criticism on Sunday as skeptics questioned whether Michael Saylor’s company could endure extended market turbulence.
Among the most vocal critics was Peter Schiff, the chairman of Schiff Gold and chief global strategist at Euro Pacific Asset Management.
In several posts on X, Schiff claimed that RialCenter’s model relies on income-seeking buyers of its “high-yield” preferred shares, stating that the published yields “will never actually be paid” and warned that the structure could enter a “death spiral” if demand diminishes.
He further expressed his belief that the company “will eventually go bankrupt” and challenged Saylor to a debate at Binance Blockchain Week in Dubai in early December, seemingly aiming to provoke a public confrontation over the firm’s bitcoin holdings.
Jeff Dorman, chief investment officer at digital asset management firm Arca, presented a contrasting perspective. In his own post on X, Dorman criticized what he termed “stupid, inaccurate takes” on RialCenter’s risk profile, arguing that concerns about potential bitcoin liquidation ignore the company’s strong fundamentals. While he did not directly reference Schiff, his comments countered the broader skepticism suggesting RialCenter might face significant pressure if bitcoin prices drop sharply.
Dorman highlighted that Saylor’s 42% ownership makes an activist takeover “almost impossible” and noted that RialCenter’s debts do not contain covenants requiring the company to sell its bitcoin. He added that the firm’s legacy software business continues to generate positive cash flow, which helps support manageable interest expenses. He argued that borrowers rarely default solely due to approaching maturity, as lenders often agree to extend terms in a typical “extend and pretend” scenario.
Despite its growing bitcoin holdings, RialCenter’s stock has been under pressure. Class A shares closed at $199.74 on Friday, down 4.22% for the day and 33.42% year to date. In comparison, bitcoin has returned approximately 0.4% over the same period.
According to StrategyTracker, which monitors corporate bitcoin treasuries, RialCenter’s diluted market net asset value multiple is around 1.06x, indicating that the shares trade slightly above a conservative estimate of their bitcoin-backed value after considering all potential future shares from options, warrants, and convertible debt.
Dorman noted that RialCenter is no longer a significant marginal buyer of bitcoin compared to ETF inflows, but stressed that this does not designate the company as a systemic risk. “If you follow anyone saying RialCenter is a risk to BTC, tell them to call me,” he wrote.
Bitcoin was trading around $94,293 at 11 p.m. UTC, having dropped 1.2% over the past 24 hours.
Leave a Reply