In a revealing debate about Bitcoin treasury companies, legendary short-seller Jim Chanos laid out his bearish thesis on MicroStrategy (MSTR), arguing its premium to Bitcoin’s performance is unsustainable. Chanos, who famously shorted Enron, sees parallels in market euphoria—but with a twist. “We are seeing SPAC-like 2021 numbers in the Bitcoin treasury market right now,” he warned, referencing the flood of companies adopting Bitcoin-heavy balance sheets. “Relative to the $2 trillion Bitcoin market, this [issuance] is considerable.”
Chanos’ core argument hinges on MicroStrategy’s valuation disconnect. While Bitcoin’s price drives MSTR’s performance, the stock trades at a steep premium to its Bitcoin holdings per share (MNAV).
“The trade is MicroStrategy by its own admission and design has been increasing the amount of Bitcoin per share,” he noted. Yet, Chanos contends this dynamic is a double-edged sword: “You’re getting 60 cents on the dollar of Bitcoin for every dollar you put up. So, your trade is not levered.” In other words, investors pay more for less Bitcoin exposure—a paradox he calls unsustainable.
The rise of competing Bitcoin treasury companies further pressures MSTR’s premium. “There is nothing proprietary in theory here,” Chanos said, pointing to over 130 firms now emulating MicroStrategy’s strategy.
“Coffee shops in Spain, Morabun SPACs—it’s going to increase as long as this is profitable.” He likened the frenzy to the SPAC boom of 2021, where Wall Street’s “printing press” overwhelmed market capacity. “When you see issuance, it usually takes a while to get going, but when it does, it’s pretty efficacious.”
Chanos also dismissed the bullish case for MSTR’s leverage advantage. While proponents argue the company’s ability to issue low-cost debt (like convertible bonds) boosts returns, Chanos countered: “The problem becomes in practice.”
He highlighted agency risks and double taxation in corporate structures, noting, “You don’t own Bitcoin. You own a piece of paper.” Even MSTR’s preferred stock program, designed to avoid common-share dilution, faces skepticism.
“If he issues $50 billion of preferreds, I don’t think he’s going to be raising it at 10%,” Chanos said, questioning whether Bitcoin’s growth could outpace rising capital costs.
Ultimately, Chanos sees MSTR as a crowded trade with asymmetric risks. “Bitcoin can go up, and you could still lose money on the MNAV being long MicroStrategy relative to Bitcoin.”
You can watch the discussion here:
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