Why is #MicroStrategy considering issuing preferred stock to fund #Bitcoin investments? It’s a smart, strategic move—not a Ponzi scheme—and here’s why:
1️⃣ No fixed repayment: Unlike debt, preferred stock doesn’t have to be repaid at a set time, reducing financial pressure.
2️⃣ Dividends are flexible: While often fixed, dividends aren’t mandatory like loan interest, giving the company financial flexibility.
3️⃣ No dilution of control: Preferred shares typically don’t carry voting rights, so existing shareholders retain control.
4️⃣ Preserves debt capacity: This approach doesn’t add to debt, leaving room for future borrowing if needed.
5️⃣ Appeals to income-focused investors: Fixed dividends attract steady-income seekers, broadening the investor pool.
6️⃣ Improves financial ratios: Preferred stock is equity, not debt, which helps keep financial ratios healthy.
And most importantly: It’s NOT a Ponzi scheme. Ponzi schemes rely on deception and new investments to pay old ones. MicroStrategy is a legitimate, publicly traded company with real operations, full transparency, and strict regulatory oversight.
Their approach is similar to property investment companies using debt to acquire real estate, betting on long-term appreciation. It’s a bold, high-risk strategy aiming for growth, but it’s neither fraudulent nor unsound. They’re betting on Bitcoin like others bet on real estate.
