Hayes Sees Three Difficult Choices Ahead For Strategy

Arthur Hayes believes that the Strategy stock is no longer the best way to gain exposure to bitcoin. According to the BitMEX co-founder, the removal of the premium once granted to the MSTR share weakens the financial process that allowed the company to issue shares and obtain more BTC. However, this analysis does not explain an immediate insolvency risk. It is mainly related to Strategy’s ability to continue its growth without diluting its shareholders.

The disappearance of the premium leaves three options for Strategy

During an interview with journalist Laura Shin, Arthur Hayes shared his reasoning. Bitcoin was around 80,000 dollars at the time, while Strategy‘s mNAV based on enterprise value was close to 1.01. Its variants (simple and diluted) were respectively 0.73 and 0.74 on August 27.

The mNAV evaluates Strategy’s capitalization relative to its cryptos, especially its bitcoins. If this ratio exceeds 1, the company can issue new shares at a price higher than the value of the equivalent BTC. Then, it uses the capital obtained after this sale to strengthen its reserve. The decrease of this premium makes this operation less advantageous and can trigger dilution.

Faced with this scenario, Hayes identifies three fundamental options for Michael Saylor :

• Issuing new shares, with a significant dilution risk for MSTR holders ;
• Selling part of the bitcoins, which would directly reduce the reserve that underlies the group’s valuation ;
• Reducing certain distributions, risking upsetting investors attracted by preferred shares’ yields.

For Hayes, this model can weaken even without a bitcoin collapse. A prolonged stagnation is sufficient, as it reduces investor interest in a stock that offers a more complex and riskier exposure than a Bitcoin ETF.

Bitcoin sales are already no longer theoretical

Strategy currently owns 840,447 BTC, according to its official ledger. Their total acquisition cost is close to 63.36 billion dollars, or an average price of 75,385 dollars per unit.

The company’s holdings were still at 847,363 BTC on June 22. They have since dropped by 6,916 BTC in less than two months. Strategy has a program that allows it to sell BTC to finance its dollar reserve.

Strategy has developed a program that allows it to sell BTC to finance its dollar reserve, pay dividends and interests, or repurchase certain shares. The company had already sold 218.4 million dollars worth of bitcoins since the start of the year as of July 26.

This policy ends the image of a company that would continuously hold all of its BTC. However, it does not mean that Strategy is abandoning this accumulation model. Its reserves remain about 168,000 BTC higher than their level at the end of 2025.

Arthur Hayes nevertheless believes that Bitcoin ETFs currently offer a simple solution. A product like BlackRock’s IBIT directly tracks BTC value, without exposing the investor to debt, preferred shares, or Strategy’s own financial decisions.

The dollar reserve prevents an immediate crisis

Strategy’s annual obligations related to dividends and interests peak at nearly 1.5 billion dollars. This cost puts continuous pressure on cash flow, but the company still has many levers to cover it.

At the end of July, its dollar reserve was around 3.75 billion dollars. This amount represented more than 25 months of coverage for dividends and interests, according to the second quarter results. The company had also reduced its convertible debt from 8.21 to 6.71 billion dollars.

Hayes’ warning thus rests more on the future effectiveness of the model than on Strategy’s survival. When the mNAV sustainably recovers a premium, the company will begin issuing shares under more favorable conditions again. Otherwise, these financing mechanisms will become more solicited.

The progression of the mNAV and the number of BTC per share will be the main data to watch. A simultaneous correction of these two indicators would confirm the weakening mentioned by Hayes. Their recovery would, on the contrary, prove that Strategy still holds its capacity to provide significant exposure to bitcoin.

Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d’une certification consultant blockchain délivrée par Alyra, j’ai rejoint l’aventure Cointribune en 2019.
Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l’économie, j’ai pris l’engagement de sensibiliser et d’informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu’elle offre. Je m’efforce chaque jour de fournir une analyse objective de l’actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.

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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.