Bitcoin Indexing Debate Intensifies as Strive Challenges MSCI Exclusion Criteria

Strive Calls Out MSCI's Bitcoin Exclusion Proposal

Investment management firm Strive has challenged MSCI's proposed criteria to exclude companies with significant Bitcoin holdings from its indexes, calling the 50% threshold "unworkable" and potentially harmful to investors seeking exposure to emerging technologies ^[1].

Strive CEO Matt Cole argued that the exclusion policy would disconnect investors from companies at the intersection of Bitcoin mining and artificial intelligence infrastructure, two of the fastest-growing sectors in technology ^[1].

Bitcoin Miners Leading AI Infrastructure Development

Cole emphasized that major Bitcoin mining companies including MARA Holdings, Riot Platforms, and Hut 8 are rapidly diversifying their operations to provide power and infrastructure for AI computing ^[1].

"Many analysts argue that the AI race is increasingly limited by access to power, not semiconductors. Bitcoin miners are ideally positioned to meet this rising demand," Cole stated ^[1]. "But even as AI revenue comes in, their Bitcoin will remain, and your exclusion would too, curtailing client participation in the fastest-growing part of the global economy."

Structured Finance Concerns

The proposed exclusion would also affect companies like Strategy and Metaplanet, which offer Bitcoin-linked structured products similar to those provided by traditional financial institutions including JP Morgan, Morgan Stanley, and Goldman Sachs ^[1].

Cole argued that the policy would create an uneven playing field: "Bitcoin structured finance is as real a business for us as it is for JPMorgan... It would be asymmetric for us to compete against traditional financiers, weighed down by a higher cost of capital from passive index providers' penalties on the very Bitcoin enabling our offerings" ^[1].

Practical Implementation Challenges

Beyond competitive concerns, Cole highlighted technical issues with the proposed 50% Bitcoin holdings threshold, noting that tying index inclusion to a volatile asset would cause companies to "flicker" in and out of indexes, resulting in increased management costs and tracking errors ^[1].

Strategy Addresses Market Concerns with Cash Reserve

Meanwhile, Strategy CEO Phong Le announced that the company raised $1.44 billion in cash reserves specifically to address investor concerns about its ability to meet obligations during Bitcoin downturns ^[2].

"We're very much are a part of the crypto ecosystem and Bitcoin ecosystem. Which is why we decided a couple of weeks ago to start raising capital and putting US dollars on our balance sheet to get rid of this FUD," Le said during CNBC's Power Lunch on Friday ^[2].

The cash reserve, funded through a stock sale, is designed to cover at least 12 months of dividend payments initially, with plans to expand coverage to 24 months ^[2].

Addressing Short-Seller Concerns

Le explained that market uncertainty about Strategy's financial stability had fueled short-selling activity. "There was FUD that was put out there that we wouldn't be able to meet our dividend obligations, which causes people to pile into a short Bitcoin bet," he said ^[2].

The CEO emphasized the company's ability to raise capital even during market downturns: "We just addressed that in eight and a half days we raised $1.44 billion — 21 months' worth of dividend obligations, and we did it 1) to address the FUD, but 2) to show people that we're still able to raise money in a Bitcoin downcycle" ^[2].

Strategy also launched a "BTC Credit" dashboard showing the company currently has sufficient assets to service dividends for more than 70 years ^[2]. Le previously stated the company would only consider selling Bitcoin if its stock fell below net asset value and it lost access to fresh capital ^[2].