MicroStrategy and Marathon Digital: Boosting or Manipulating BTC?

Peter Schiff warns that Bitcoin’s value is artificially inflated by leveraged buying.
MicroStrategy and Marathon’s leveraged strategies raise concerns about Bitcoin’s stability.
Bitcoin yields from companies like MARA and MSTR are propped up by artificial demand.

Bitcoin critic Peter Schiff believes leveraged investments from big players like MicroStrategy (MSTR) and Marathon Digital (MARA) are contributing to Bitcoin (BTC) price manipulation. He warned that this artificial inflation of Bitcoin’s price could harm both the cryptocurrency and the broader financial market.

In other words, due to insufficient real demand, Bitcoin is being artificially propped up through leveraged buying from MSTR and MARA. This seems like a recipe for disaster.

— Peter Schiff (@PeterSchiff) December 10, 2024

MicroStrategy and Marathon Digital’s Bitcoin Holdings

MicroStrategy, a business intelligence firm, gained notoriety for its aggressive Bitcoin strategy. The company owns a vast Bitcoin reserve, which has helped support Bitcoin’s price.

Similarly, Marathon Digital, a crypto mining company, has issued convertible bonds to fund buying more Bitcoin. Marathon has accumulated 11,774 BTC, valued at around $1.1 billion. Critics are scrutinizing these leveraged moves, questioning the sustainability of such strategies.

Specifically, Marathon’s actions have raised alarms due to the size of its Bitcoin purchases and the potential risks they pose. For instance, the company used proceeds from convertible notes offerings to fund its latest Bitcoin buy.

This has flooded the market with a significant amount of BTC, pushing its value higher despite a lack of real demand. As of December 9, 2024, Marathon holds 40,435 BTC, valued at approximately $3.9 billion, based on a spot price of $96,500 per Bitcoin.

Using the proceeds from its zero-coupon convertible notes offerings, MARA has acquired 11,774 BTC for ~$1.1 billion at ~$96,000 per #bitcoin and has achieved BTC Yield of 12.3% QTD and 47.6% YTD. As of 12/9/2024, we hold 40,435 BTC, currently valued at $3.9 billion based on a… pic.twitter.com/2uvnrhbxaP

— MARA (@MARAHoldings) December 10, 2024

Yield From Bitcoin Artificial Price Support

Both MicroStrategy and Marathon Digital profit from Bitcoin yields, with MicroStrategy’s treasury operations generating a BTC yield of 3.3%. This has resulted in a net benefit of around 13,270 BTC for shareholders. At current Bitcoin prices, this equals approximately $1.3 billion for the week.

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