Gerber Flags Strategy’s Bitcoin Leverage as Risk for Market Selloff

• In the latest Bitcoin developments, Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, said gold remains more practical than Bitcoin for everyday transactions, reopening the long-standing discussion around Bitcoin’s real-world usefulness.
• Gerber also took aim at Michael Saylor’s Strategy Inc. (NASDAQ: MSTR), warning that the company’s leveraged Bitcoin accumulation strategy could potentially trigger a major market downturn if it starts to unravel. His comments were included in a note shared with Benzinga.
• Gerber’s argument about gold is based on its physical accessibility, noting that gold can still be used or exchanged across a wider range of locations globally than Bitcoin, despite years of claims about the cryptocurrency’s potential as a payment method.
• Trader Scott Melker challenged that view, pointing out that Bitcoin-linked Visa and Mastercard cards allow users to spend their crypto at almost any merchant that accepts traditional payment cards.
• The distinction is important when evaluating Bitcoin payment adoption. Card-based transactions typically involve a custodian converting Bitcoin into fiat currency at checkout, meaning the merchant does not necessarily receive Bitcoin directly on the blockchain.
• Gerber’s stronger criticism is focused on Strategy’s method of raising capital through stock sales to purchase additional Bitcoin. He questioned the value proposition for investors when the company’s shares trade at a premium to the Bitcoin held on its balance sheet. Strategy’s stock currently trades at around 1.61 times the value of its Bitcoin holdings.
• Gerber argued that selling company stock at an elevated valuation to purchase Bitcoin creates an unfavorable deal for shareholders, questioning why investors would effectively pay $200 to obtain $100 worth of Bitcoin exposure.
• He also warned that Bitcoin’s recurring sharp corrections could put pressure on Strategy’s balance sheet and potentially force the company to sell some of its holdings if its debt-financed structure comes under stress. Gerber described such forced selling as a scenario that could severely damage Bitcoin’s market.
• Strategy has argued that its move toward perpetual preferred stock, which has no fixed maturity date, reduces the risk of forced liquidation even if Bitcoin suffers an 80% decline.
• The company most recently reported holding 629,376 BTC valued at more than $72 billion after purchasing another 430 BTC for approximately $51.4 million. Despite the additional accumulation, Strategy’s stock has underperformed Bitcoin over the same period.

Bitcoin miners shift toward AI

• Gerber also raised concerns about Bitcoin’s mining infrastructure as major miners increasingly redirect computing capacity toward artificial intelligence and high-performance computing.
• The shift is already underway, with several publicly traded mining companies converting portions of their facilities into AI data centers and securing contracts for AI-related hosting. Riot Platforms’ recent AI leasing agreement is one example of the broader trend.
• Core Scientific, for instance, has been transforming a 300-megawatt facility in Texas that was previously dedicated to Bitcoin mining into an AI-focused data center campus. Its colocation business has now generated more revenue than its own Bitcoin mining operations.
• CoinShares projections cited in industry coverage suggest that for miners with substantial AI contracts, mining could account for less than 20% of total revenue by the end of 2026, down from roughly 85% in early 2025.
• The shift does not mean Bitcoin mining is disappearing. Instead, it shows that the economics of large-scale computing are increasingly favoring AI infrastructure and data-center hosting over dedicated Bitcoin mining. That trend lends some support to Gerber’s concerns, although it does not by itself prove that AI-related conversions have permanently limited Bitcoin’s future growth.

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