Peter Schiff, the chief economist at Euro Pacific Capital and a well-known advocate for predicting the downfall of fiat currencies, recently revisited his “cash flow” argument. This time, he focused on Tuesday’s discussion surrounding industrial silver miners.
Schiff drew a comparison between the anticipated profits of these silver mining companies and the lack of yield associated with Bitcoin, which is currently recognized as the largest digital currency in existence.
He asserted that these mining firms are poised for significant profit growth by 2026. According to him, their current market valuations do not accurately reflect this impending financial boon.
In contrast to these productive ventures, Bitcoin does not present any such potential for earnings growth.
The ‘zero-yield’ critique
The criticism regarding “no earnings,” often wielded by skeptics from traditional finance backgrounds, challenges how institutional investors assess asset value. Unlike other investments that generate returns or produce goods or services, Bitcoin lacks an internal mechanism to create yield; it essentially produces nothing tangible. For instance, owning shares in Apple signifies a stake in future cash flows while holding Bitcoin merely represents ownership of entries on its blockchain ledger.
Warren Buffett—widely regarded as one of the most influential investors—champions this perspective. His fundamental belief is that an asset must have productive capacity to hold value over time.
Charlie Munger, Buffett’s long-time business partner and confidant has similarly expressed views suggesting that investing in non-productive assets resembles gambling more than sound investment strategy.
As a result of their beliefs about cryptocurrency’s speculative nature rather than its investment potential they categorize it under reliance on what is known as “Greater Fool Theory.”
According to Schiff’s argumentation regarding profitability within crypto markets—the only way one can realize gains is by selling their holdings at inflated prices later on down the line.
Another attack on Strategy
Additionally, Schiff has initiated another mathematical critique targeting Michael Saylor’s accumulation strategy with MicroStrategy (ticker MSTR). He claims that Saylor’s aggressive buying practices have compromised company efficiency significantly over time.
At the heart of Schiff’s analysis lies concern about rising costs associated with acquiring Bitcoin through MicroStrategy; after five years into this endeavor according to his calculations—the average cost per coin now stands around $75k each!
This elevated price point implies that MicroStrategy currently enjoys only a modest “paper profit” margin amounting merely 16% across its total holdings when assessed holistically! When evaluated annually—this translates into just above three percent return per year—a figure which leads Schiff firmly asserting Saylor would have fared “much better off” investing elsewhere during those five years instead!