A company that I have recently started to follow is Microstrategy. Their primary business model since 2021 has pivoted in investing in Bitcoin.
Leaving aside the discussion of whether crypto is halal or not, MSTR is primarily purchasing Bitcoins by raising debt (it is billions of debt).
Zoya’s compliancd report indicates this is a halal investment and I can see the debt/market cap is under the threshold.
However, my question is IF a company is raising debt to fund its operations of BTC purchase, is this company still Ok to be considered halal?
The primary operating cash flow isn’t sufficient for the company to keep purchasing BTC and since the market seems to be using MSTR as a anchoring point to Bitcoin, MSTR share price has risen 300% in the past 3 months and hence, debt/market cap will always be under 33%.
MicroStrategy main performance reason is owing BTC but the actual valuation to the company with the amount of bond they issued and low number of other products revenue is present in buying btc at price of 100k while you can just buy bitcoin at lower prices directly now with less risk for the long run. It is also back to your strategy and personal preference. I just try to transfer unbiased point view wishing a good luck to everyone.
Thanks for your comment but l don’t think it clarifies my question…
From an Islamic perspective, we need to stay away from interest related products. However, in the western business world, all companies have debt (since it is cheaper) to help their growth.
However, in the case of MSTR, their debt to equity ration is greater than 100%… their core business has become a secondary business now…
If I borrowed 100m in interest related loans to buy 10 houses, that doesn’t make it a halal investment since my source of funds is questionable
Since in the case of MSTR, why isn’t the fact they are raising so much debt to buy BTC, make it a questionable (from Halal investment) tag under Zoya.
I am just trying to ascertain whether the accounting standards alone are enough to ascertain whether a company is halal or not to invest in…