MW Short-seller Jim Chanos goes head-to-head with bitcoin evangelist on MicroStrategy's premium

By Jules Rimmer

Jim Chanos made his name and reputation by shorting Enron shares before it went belly-up in America's biggest bankruptcy in 2001. Now he has the premium of MicroStrategy to the bitcoin that it holds in his crosshairs.

Up against Chanos, justifying what is now called Strategy's (MSTR) the 1.9 times premium to net asset value that in a We Study Billionaires podcast debate was Pierre Rochard, CEO of the Bitcoin Bond Company and a well-regarded advocate for the cryptocurrency.

The topic of contention was the premium which has ranged between 3.7 times in November of 2024 and dipping just below 1.0 in the spring of 2022. Chanos does not believe a bitcoin treasury company, essentially a bitcoin holding company, does not merit any premium and so he has shorted Strategy stock and paired it against a long position in bitcoin itself.

The heart of Chanos' argument is that Strategy offers nothing to merit a premium, and the premium should contract over time as other bitcoin treasury companies like MARA Holdings (MARA), Riot Platforms (RIOT) , and Metaplanet (JP:3350) have established copycat shops or "me-too" enterprises, operating a near-identical business model. Theoretically, this should dilute the appeal of Strategy. There are reportedly 143 companies playing the same game.

Chanos has dismissed the case in favor of a premium, presented by Strategy CEO Michael Saylor, as "financial gibberish" and claimed Saylor doesn't fully understand the implications of the convertible debt and preferred shares his company has issued.

It's fair to characterize Rochard as a bitcoin mega bull. While he agrees that the premium can fluctuate over time according to sentiment and external factors, he contends that it is fundamentally justified. Only the extent of the premium is up for debate in his mind.

First of all, he thinks Strategy has a first-mover advantage and can also derive benefits from the sheer size of its bitcoin holdings, which at more than 600,000 is roughly ten times that of the largest competitor. This enables Strategy to leverage itself efficiently. It has raised roughly $9 billion in debt to buy bitcoin shares in the open market, avoiding dilution of common shareholders for the most part although some were sold to fund purchases in June.

Rochard also views the expansion of the bitcoin investment universe as a net positive for all players in the space and that Strategy can maintain or grow its premium as new buyers flood into that space.

Chanos struck back against the leverage point, claiming he can get leverage himself without double taxation and, if he owns bitcoin outright in his fund's name, greater security. Rochard counters this very effectively: given its size, Strategy can leverage itself far more efficiently than any small investor. Moreover, Strategy, treated by many as a call option on bitcoin, offers exposure to upward volatility skew - wherein out-of-the-money call options are valued higher than out-of-the-money puts - and traders are prepared to pay for that.

Rochard is optimistic about the Trump administration's initiatives to promote the adoption and utilization of cryptocurrencies and thinks this will attract more investors into the crypto space. He also suggested another motivation for investors who are bearish on the dollar DXY in that borrowing dollars to buy bitcoin effectively replicates a short position on the dollar.

-Jules Rimmer

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July 16, 2025 07:27 ET (11:27 GMT)

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