Analyst Jacob King called MicroStrategy's Bitcoin-centric business model a "huge scam" that is unsustainable and doomed to collapse.
King said MicroStrategy's strategy of issuing bonds to buy Bitcoin is a "giant Ponzi scheme." He explained that the company's model relies on a feedback loop: issuing debt or equity to buy Bitcoin will push up the price of the currency, which in turn increases MicroStrategy's market value. Higher valuations allow the company to raise more funds to further purchase Bitcoin. King warned that the entire cycle depends on the continued rise in Bitcoin prices.
"When Bitcoin stagnates or collapses, the entire structure collapses," King added.