Milk Road co-founder reveals why Strategy's STRC isn't the 'ponzi' Schiff claims

Peter Schiff spent much of April 22nd and 23rd calling Strategy's STRC preferred stock a Ponzi, describing it as "the most obvious Ponzi that has ever existed" and holding X spaces for people to convince him that it was not. He also slammed the SEC for allowing Michael Saylor to promote the instrument.

The attack landed three days after Michael Saylor's Strategy disclosed a $2.54 billion Bitcoin purchase funded largely by STRC proceeds, pushing the company's treasury past 815,000 BTC. That makes Strategy the largest corporate Bitcoin holder on earth, sitting on roughly $61.5 billion worth of the asset at an average cost basis of about $66,384 per coin.

In a recent interview with TheStreet Roundtable, Milk Road's co-founder, Kyle Reidhead, took the other side.

"I've put a lot of effort into trying to understand what he's doing here," Reidhead said. "It doesn't come without risk, but I don't think it is this ticking time bomb that is gonna go from 100 to zero overnight."

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STRC basics

STRC — short for Stretch — is Strategy's Variable Rate Series A Perpetual Preferred Stock. It is a hybrid security that pays a set dividend like a bond but sits on the balance sheet as equity, giving Strategy flexibility that straight debt does not.

It carries a stated amount and initial liquidation preference of $100 per share and currently pays an 11.5% annual dividend, distributed monthly in cash — working out to roughly $0.96 per share per month. Strategy first priced STRC in July 2025, and the dividend has been increased seven consecutive months before holding steady at 11.5% for April, the first month without an increase since inception.

The model is straightforward: Strategy raises cash by issuing STRC shares through at-the-market offerings, then uses the proceeds to buy more Bitcoin — without diluting common stock shareholders.

A self-balancing system

STRC has two levers built into its design. If the price climbs above $100, Strategy issues more shares to push it back toward par — and pockets more Bitcoin in the process. If it slips below $100, Strategy raises the dividend to pull yield-seeking buyers back in. The company has stated it intends to adjust the monthly dividend in whatever direction it believes will keep the trading price close to that $100 stated amount.

There is a floor on how fast dividends can fall. Strategy cannot reduce the rate by more than 25 basis points from the prior month, and the rate can never drop below the one-month term SOFR rate.

"That's what they've done so far, and it's worked every single time," Reidhead explained.

The math gets more interesting if STRC falls. If shares sell off to $70, that selling shrinks the outstanding share count, which shrinks Strategy's total dividend obligation. A two-year cash runway, in that scenario, stretches to four or five years because the company is paying dividends on fewer shares.

A discounted price also changes the buyer math. New investors are not just getting the yield — they are getting a potential capital gain back to par on top of it.

"STRC is at $70, I might not care about the 11.5% APY, but now I think STRC can go back up to $100, and now I can get 30% on that, plus my 11.5% APY," Reidhead said.

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What Schiff gets wrong, and what he gets right

Schiff's core argument is that the structure is circular — Strategy relies on new investor money to keep buying Bitcoin, which supports the stock price, which allows it to raise more money. He called the 11.5% yield "financed by a pure Ponzi scheme" and warned it collapses if new buyers dry up.

The distinction, as Reidhead sees it, is in the math. Saylor does not need Bitcoin to go parabolic for STRC to work. He needs it to appreciate roughly 2% a year — enough to service the dividend and keep the mechanism turning.

"A lot would have to go wrong for this thing to completely blow up," he said.

Most legal analysts have noted that Strategy openly discloses in its SEC filings that dividends depend on continued capital raises, which is a transparency that traditional Ponzi schemes by definition lack.

The 1 million Bitcoin race

Saylor has publicly said he wants to hit 1 million Bitcoin before year end. Strategy disclosed a $42 billion fundraising plan to get there, split evenly between $21 billion in common stock and $21 billion in STRC. With roughly 185,000 BTC still to go, the company would need to maintain a purchasing velocity of roughly $540 million per week through December.

STRC is the pipeline powering that pace. Reidhead is skeptical Strategy hits the headline number but thinks the velocity is the real story.

"What the market cares about is, does he keep buying in the billions every week?"