Will Strategy's profits invite Schiff's critique?
2025-11-01 • Ian Irizarry
TL;DR
Strategy (formerly MicroStrategy) posted a surprisingly strong Q3 2025 financial performance—reversing losses, generating $2.8 billion net income and growing its Bitcoin holdings to over 640,000 BTC. The results drew fire from gold advocate Peter Schiff, who slammed the earnings as “fraudulent” because much of the profit stems from unrealized Bitcoin gains.
What Strategy’s Q3 2025 Financials Mean for Funding-Seeking Companies
If your company is eyeing funding strategies, Strategy’s results offer both a blueprint and a warning. Here’s what they did well—and what many in your shoes should watch out for.
Key Financial Highlights That Surprised the Market
- Net income of $2.78B versus a loss of $340M in Q3 2024. Strategy reports $2.8B profit in Q3 as Bitcoin treasury model grows
- Operating income reached $3.9B, showing a sharp turnaround. Strategy reports 2.8 billion profit as Bitcoin holdings surge past 640,000 BTC
- Revenues from the legacy software business rose ~11% YoY, generating $128.7M—above analyst expectations. Strategy reports 2.8 billion profit as Bitcoin holdings surge past 640,000 BTC
- BTC holdings stand at 640,808 BTC, acquired at ~$74,032 average cost basis, valued now near $70.9B. Strategy reports 2.8 billion profit as Bitcoin holdings surge past 640,000 BTC
Schiff’s Critique: Substance or Noise?
Peter Schiff wasn’t impressed. He lobbed criticism across several fronts:
- Claimed earnings are misleading because they mostly reflect unrealized gains from Bitcoin rather than cash-on-hand performance. Peter Schiff on MSTR rising; Strategy records $20B BTC gain
- Argued that Strategy’s 2025 guidance depends heavily on the assumption that Bitcoin will rise further. If BTC stalls, the company could run into trouble. Peter Schiff slams Strategy's reliance on Bitcoin breakout
- Said the business model is risky to the point of calling bankruptcy “inevitable,” accusing Strategy of being a Bitcoin proxy rather than a diversified business. Peter Schiff slams MSTR business model is a complete fraud; bankruptcy inevitable
Lessons for Companies Looking for Funding
You’re probably imagining how your company can stand out to investors—while staying cautious. Here’s what Strategy shows you should aim for and avoid.
What Strategy Got Right
- Clarity in Metrics: They introduced KPIs like “BTC Yield” and “BTC $ Gain.” Transparently sharing performance tied to Bitcoin gives investors a clear lens. Strategy Announces Second Quarter 2025 Financial Results
- Capital Raising via Equity & Preferred Stock: They cash in shareholder excitement via stock offerings—common shares and preferred instruments like STRC. Strategy Announces Second Quarter 2025 Financial Results
- Aggressive Asset Acquisition: Accumulating BTC at discounted basis stamps their balance sheet with upside potential. Strategy reports 2.8 billion profit as Bitcoin Holdings Surge Past 640,000 BTC
What to Watch Out For
- Dependence on Volatile Assets: Earnings swings will come if your valuation is tied to crypto. Schiff’s critique focuses precisely on that. Peter Schiff slams Strategy’s reliance on Bitcoin breakout
- Hype vs Substance: Investors may love headline numbers—$2.8B profit, $20B BTC gain—but clarity on cash flow, recurring revenue, product strength matters.
- Dilution Risk: Equity and preferred stock issuances may reduce ownership. Investors care about that.
- Accounting Rules & Transparency: Fair value accounting for Bitcoin (recognizing gains/losses at market value) can introduce noise and risk. Strategy Announces Fourth Quarter 2024 Financial Results and Launches New Website Strategy.com
Real Examples: What Others Did, What You Can Learn
| Company | What They Did | What Investors Liked | What It Cost Them |
|---|---|---|---|
| Strategy | Allocated billions into Bitcoin; offered preferred shares; pushed guidance high. | Strong upside during BTC rally; ROI for early investors. | Accumulation risk; Schiff and others calling out volatility-based earnings. |
| Tesla | Held BTC temporarily; sold some to capture gains. | Demonstrated innovation; showed flexibility. | Exposure to crypto risk; investor concerns around focus and stability. |
| GameStop | Announced BTC reserve strategy, borrowed from Strategy’s playbook. | Generated attention & investor buzz. | Losses when BTC drops; low margin revenues in core retail business. |
Frequently Asked Questions
Is Strategy’s profitability real or just paper gains?
Much of it is unrealized gains—BTC has increased in value. It’s only on paper until sold. That’s exactly what Schiff criticized. Real cash flow remains essential.
Does raising guidance based on future price predictions bother investors?
It can. Investors worry when guidance assumes bullish scenarios. If outcomes diverge, they may feel misled. Always justify assumptions and outline risk scenarios.
How much Bitcoin is “enough” if a company wants to build a treasury-reserve strategy?
There’s no one-size-fits-all. Many recommend 1–10% of reserves or capital surplus. Strategy went all-in. If you're more conservative, lean lower. Balance with core business health.
Can this model work in bear markets?
Yes, but with strain. The volatility of BTC means earnings swing wildly. Strong governance, sufficient liquidity, fixed costs under control—these help survive a BTC decline.
What This Means If You’re Pitching to Investors
If your company is seeking funding now, charts like these matter:
- Show clean, recurring revenues—don’t let everything ride on unrealized gains.
- Structure your capital-raises thoughtfully—don’t dilute the core too much.
- Be transparent about risk—volatility, regulatory shifts, custody, and accounting.
- Use crypto as part of a broader strategy—not your only story unless you're fully aligned.
If you want help putting together a funding pitch deck or treasury strategy that attracts deep-pocketed investors—without setting yourself up for Schiff-style criticism—I can walk you through building one tailored to your business.