Analyst Jacob King has labeled MicroStrategy’s Bitcoin-focused business model a “giant scam,” claiming it is unsustainable and destined for collapse.

King, a contributor to the Whalewire newsletter, issued this critique of MicroStrategy in a detailed post on X. King argued that MicroStrategy’s strategy of issuing bonds to buy Bitcoin (BTC) is a “giant Ponzi scheme.”

King explained that the company’s model relies on a feedback loop: issuing debt or equity to purchase Bitcoin drives up the cryptocurrency’s price, which in turn increases MicroStrategy’s market capitalization.

This higher valuation allows the company to raise more capital, enabling further Bitcoin purchases. King warned that the entire cycle depends on Bitcoin’s price continuing to rise.

“When Bitcoin stagnates or crashes—watch the entire structure collapse,” King wrote. He compared MicroStrategy’s dependence on Bitcoin’s value to an addict’s reliance on their supply, describing the approach as “pure desperation.”

Michael Saylor’s duplicitous stance on Bitcoin

King’s criticism extended to Michael Saylor, MicroStrategy’s co-founder and executive chairman. He accused Saylor of tying the company’s future to an unsustainable strategy and highlighted the stark contrast between Saylor’s current enthusiasm for Bitcoin and his earlier skepticism.

“In 2013, [Saylor] dismissed Bitcoin as ‘useless,’” King stated. “Now, he has tied MicroStrategy’s entire future to an unsustainable feedback loop dependent on perpetual price increases.”

The analyst went further, suggesting that MicroStrategy’s collapse could surpass financial scandals such as FTX and Enron. MicroStrategy has consistently defended its Bitcoin-centric strategy, arguing that it provides long-term value for shareholders.

King’s critique comes as Bitcoin trades at $104,300, reflecting a surge in its value.