Gerber Warns Strategy’s Bitcoin-Fueled Leverage Risks Market Pressure

• Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, said gold is still more convenient than Bitcoin for everyday payments, reviving questions about Bitcoin’s practical utility.
• Gerber also raised concerns about Michael Saylor’s Strategy Inc. (NASDAQ: MSTR), arguing that the company’s leveraged Bitcoin-buying strategy could worsen a market downturn if it is eventually forced to sell its holdings. His comments were included in a note shared with Benzinga.
• Gerber’s comparison focuses on gold’s broad physical usability. He noted that gold can be exchanged across more locations worldwide than Bitcoin, despite years of efforts to promote BTC as a mainstream payment method.
• Trader Scott Melker disagreed, pointing out that Visa and Mastercard cards connected to crypto accounts already allow users to spend Bitcoin at almost any merchant that accepts card payments.
• However, these card-based transactions generally depend on intermediaries that convert BTC into fiat currency at checkout. Therefore, the merchant does not necessarily receive Bitcoin directly through an onchain transaction.
• Gerber’s primary criticism concerns Strategy’s use of equity sales to finance its Bitcoin purchases. He questioned the benefit to shareholders when Strategy’s market value exceeds the value of its underlying BTC holdings, with the stock trading at about 1.61 times its Bitcoin reserves.
• He argued that issuing shares at a premium to buy Bitcoin creates an unfavorable deal for investors, essentially requiring them to spend $200 to gain $100 in Bitcoin exposure.
• Gerber further warned that a major Bitcoin price correction could put Strategy’s leveraged balance sheet under stress and potentially force the company to liquidate BTC. Such selling could, in his view, intensify pressure across the broader Bitcoin market.
• Strategy has responded that its use of perpetual preferred securities, which do not have a fixed maturity date, reduces the threat of forced sales even during an extreme 80% Bitcoin decline.
• In its latest disclosure, Strategy reported 629,376 BTC worth more than $72 billion after purchasing an additional 430 BTC for approximately $51.4 million. Despite the accumulation, the company’s stock has underperformed Bitcoin during the same period.

Bitcoin mining capacity moves toward AI

• Gerber also questioned whether Bitcoin’s mining ecosystem could lose strength as major miners increasingly shift their infrastructure toward AI and high-performance computing.
• The trend is already developing across the sector. Several publicly traded mining companies have begun repurposing facilities for AI data centers and signing contracts to provide computing capacity. Riot Platforms’ recent AI leasing agreement is one example.
• Core Scientific has likewise been converting a 300-megawatt Texas facility previously used for Bitcoin mining into an AI data-center campus. Its colocation operations now generate more revenue than its self-mining business.
• CoinShares estimates cited in industry reports suggest that for miners with significant AI contracts, Bitcoin mining could account for less than 20% of total revenue by the end of 2026, compared with roughly 85% at the beginning of 2025.
• The growing AI pivot does not mean Bitcoin mining is disappearing. Instead, it reflects changing economics in which AI infrastructure and data-center hosting can generate more attractive returns than traditional mining. While this supports part of Gerber’s argument, it does not prove that the shift will permanently restrict Bitcoin’s long-term upside.