TechFlow News, June 27: Brad Garlinghouse, in an interview with CNBC, stated that he remains bullish on Bitcoin’s long-term prospects but believes Strategy’s model of continuously purchasing Bitcoin via preferred stock financing has negatively impacted the crypto market.
Garlinghouse said, “Financial engineering does not drive long-term value.” He argued that the long-term value of any digital asset ultimately stems from real-world utility and criticized Michael Saylor’s team for failing to focus on genuinely value-creating initiatives, instead over-relying on financing instruments.
He noted that over the past year, Strategy has persistently raised funds through preferred stock issuances to buy Bitcoin. Among these, STRC preferred shares carry an annual dividend yield of 11.5%, were designed to trade near $100, but have recently traded at approximately a 25% discount to par value—hitting an all-time low this week. Meanwhile, Strategy’s common stock has fallen to its lowest level since February 2024, and Bitcoin’s price has dropped below $59,000.
Recently, Strategy’s financing model has drawn scrutiny from certain market participants. CryptoQuant contends that the company should pause further Bitcoin purchases and rebuild its cash reserves; its ability to cover STRC preferred dividends has shrunk from over seven years to roughly 14 months. When STRC shares trade persistently below par, Strategy’s mechanism of raising equity capital to purchase Bitcoin becomes constrained.
However, Mark Palmer, analyst at Benchmark-StoneX, holds a different view, asserting that Strategy’s financing engine has merely become less efficient—not broken—and that the current situation should not be equated with a collapse of its financing model.
