Garlinghouse Slams Strategy's Bitcoin Funding Mechanism as Unsustainable

Ripple's CEO Brad Garlinghouse criticized Strategy's funding mechanism for acquiring Bitcoin, calling it 'financial engineering' that lacks long-term value creation.

Garlinghouse made his comments during a CNBC appearance on Friday. He stated that financial engineering does not drive long-term value and that Team Michael Saylor's approach has hurt the overall market.

The STRC preferred stock, which offers an 11.5% annual dividend yield, plunged to unprecedented lows on Thursday, sinking 26% below its designated $100 par value. This decline is seen as a damning indictment of Strategy's funding mechanism.

CryptoQuant research published this week recommended that Strategy suspend Bitcoin buying operations and prioritize strengthening its cash position. According to the firm's analysis, the financial buffer supporting STRC's dividend obligations has eroded dramatically from over seven years of coverage down to approximately 14 months.