Tickets on sale now for our next conferenceBitcoin Treasury Companies: A Ponzi scheme or the inevitable corporate adoption of Bitcoin?
Over the past year, an entirely new class of company has emerged and captured the attention of both Wall Street and retail investors. These so-called Bitcoin Treasury Companies are buying and holding Bitcoin on their balance sheets at a pace we’ve never seen before.
To some, they represent a groundbreaking new way for businesses to strengthen their foundations in the digital era. To others, they look like little more than a new type of Ponzi scheme, dependent on ever-rising valuations and constant inflows of fresh capital.
Whatever the opinion, the growth is undeniable. 2025 has seen a surge in these firms across the globe, led by Strategy (formerly MicroStrategy) in the US, and followed by challengers in Japan, France, and the UK.
So what exactly are Bitcoin Treasury Companies? How do they create value, and how should they be valued? What are the risks, and the potential rewards, for investors?
Let’s break it down.
What is a Bitcoin Treasury Company?
There are various interpretations on definition. In a broad sense, a Bitcoin Treasury Company is any company, public or private, that is employing a strategy of acquiring Bitcoin to sit on the company’s balance sheet. Often, one of the key aims for the company is then to add to that Bitcoin over time to further strengthen the balance sheet. 2025 has seen an explosion of these types of firms emerging, as documented on BitcoinTreasuries.net for public companies. Strategy (MSTR) still holds an unassailable lead at present, holding around 2/3rds of the entire holdings of the top 100, and over 12x the second placed in the table at present.
In a narrower definition, the term is also used specifically to describe companies whose primary business model is to acquire Bitcoin on the balance sheet. These holdings will generally then dwarf the operations elsewhere in the business. Examples are Strategy (MSTR) in the US, Metaplanet (MTPLF) in Japan, The Blockchain Group (ALTBG.PA) in France and Smarter Web Company (SWC) in the UK. The remainder on the Bitcoin treasuries top 100 can then generally be split into Bitcoin miners (e.g. MARA Holdings, Riot) and firms holding Bitcoin on their balance sheet but in a more measured fashion in relation to their business operations (e.g. Tesla, Gamestop).
Other innovations are also coming, such as Nakamoto Inc which seeks to build a global portfolio of these Bitcoin treasury firms, whilst also holding Bitcoin on its own balance sheet.
How would we go about valuing a BTC Treasury Company. Aren't they somewhat overvalued in comparison to the bitcoin they hold?
Valuations have been extremely volatile, even relative to Bitcoin. A common starting point is to compare a company’s market cap with the value of Bitcoin on its balance sheet. The ratio is called the Multiple to Net Asset Value (MNAV).
Critics argue that without profitable business operations alongside the treasury, MNAV should sit near 1. In practice, many firms, (especially newer ones) have been trading at much higher multiples, though these have contracted hugely in recent weeks.
Another lens is Bitcoin per share (or satoshis per share) relative to share price. If a company consistently increases Bitcoin per share, it should outperform Bitcoin over time. In reality, this depends on the market price of the stock.
A valuation framework from conventional finance applies here too:
- Value of assets on the balance sheet (mostly Bitcoin)
- Plus a valuation of expected future profits (which can buy more Bitcoin)
- Adjusted for debt and other liabilities
- Plus expectations of future Bitcoin acquisitions through market operations, not just profits
It’s that last factor (anticipated future acquisitions) that often drives valuations above the underlying Bitcoin and is the greatest source of debate in terms of valuations.
How do these firms raise capital to buy more Bitcoin?
In a mix of ways. Chiefly this has been either by issuing some form of debt, or by creating further equity and selling it out into the market (sometimes termed an “at the money” or ATM offering).
Strategy has also been raising capital by issuing a variety of innovative preference shares which promise dollar dividends into perpetuity with no maturity date – in other words the debt may never be called back. These are attractive to investors as the bitcoin Strategy holds offers significant over collateralisation to the value of the preference shares issued (and Strategy have issued broad guidance on each preference share as to the target level of over collateralisation they will look to maintain). For Strategy, they are creating coupon liabilities priced in dollars in exchange for further Bitcoin. If Bitcoin continues to appreciate above 9-10% per year in the long term, it will prove an effective way of increasing bitcoin per share for shareholders.
Wait. If these firms trade at, say, 3x MNAV, can’t they issue new shares, buy Bitcoin with the proceeds, and increase Bitcoin per share?
Exactly – this has been termed “accretive dilution” if it dilutes the overall share count yet increases btc held per share. This can lead to a flywheel effect of sorts – the more Bitcoin being added to a firm’s balance sheet, the higher the market expectations of future acquisitions, which can lead to a higher share price. This then allows more ATM issuance and the purchase of even more Bitcoin. Rinse and repeat.
This was predicted for Strategy (MSTR) in the first Quant Bros episode in March 2024. This has largely played out since with well in excess of $20bn at the money share issuance, which has continually increased Bitcoin per share for existing MSTR shareholders.
With that said, this can reverse direction also – a drop in MNAV can restrict the ability to sell further equity to raise more Bitcoin, which in turn can depress the expectation of future Bitcoin acquisitions and in turn weigh on the share price. Some companies such as Sequans Communications now have a market cap of less than the Bitcoin they hold.
Ok, so this is all going to crash in the next Bitcoin bear market (if it's not already the cause of it)?
There are clear pitfalls that could get these types of companies into trouble – for example being overleveraged and needing to sell Bitcoin at a loss to pay back debt. In addition, the concept requires sound and trustworthy management in terms of carrying out an underlying strategy with integrity and transparency. The relative recent explosion in numbers of companies carrying out these strategies suggest that for some at least, that won’t be the case.
A reduction in both the value of their MNAV relative to Bitcoin held, plus a crash in the Bitcoin price itself in a bear market could lead to some savage drawdowns. With that said, for well run companies that are not overleveraged, the Bitcoin held on their balance sheets should act as a floor of sorts to any crash. For anyone considering an investment in a BTC treasury company, holding bitcoin itself is the opportunity cost and you may end up outperforming or underperforming Bitcoin as the hurdle rate. Finally, it goes without saying that these firms depend on Bitcoin proving a good long term investment. As can be seen by some recent media coverage, commentators need to also understand Bitcoin itself or the proposition will never make sense.
For now though, look at some of the returns! Let's set one up?
The last few months have shown highly diminishing returns already in terms of new firms adopting a Bitcoin treasury strategy as their primary business model. Successful firms will need to demonstrate a strong and continued record of raising capital from their market operations, and/or run a profitable business so that those profits can be used to acquire more bitcoin for their balance sheet over time.
It’s worth noting that in 2025 Strategy not only leads by a country mile in terms of overall Bitcoin held, but also has acquired far more over the year to date than all competitors combined. We are also seeing other localised winners around the globe though that have shown successful ability to access new capital and grow bitcoin per share despite the small size of the underlying operating business. Similar to Strategy, they
- tend to run small but profitable businesses in relation to the value of their Bitcoin based balance sheet
- have access to large pools of capital in their local jurisdiction
- enjoy a lead in Bitcoin held over competitors in that jurisdiction
- had a fair launch with minimal insiders at outset (Michael Saylor himself set a standard for this, operating a dutch auction for shares for existing shareholders at higher than the then market price in 2020, should any of them want to exit given the proposed Bitcoin strategy).
For these facets, both Metaplanet (Japan) and Smarter Web Company (UK) spring to mind.
How might I evaluate whether one company was cheap, relative to another?
Jesse Myers from Smarter Web Company has recently released a research note, which proposes a Price to Earnings type ratio (PE ratio) specifically designed to compare Bitcoin treasury companies in an analogous fashion.
The measure proposed is named P/BYD (pronounced P-Bid), and measures the estimated time it might take a Bitcoin treasury company to grow its Bitcoin per share metric (essentially the earnings element of the ratio) to justify its current multiple of net asset value (MNAV; the price element of the ratio).
This is analogous to the traditional PE ratio (Market value per share / Earnings per share) as this illustrates how many years earnings it would take to amass to the total price one is paying for the share. Apple (AAPL) currently has a PE ratio of 32, suggesting that at current levels it takes around 32 years to earn out its share price via earnings.
Recapping to the bullets above on how a Bitcoin Treasury Company might be valued from first principles, the plus with P/BYD is that it rationalises to a more mature landscape. Imagine a hypothetical world where Bitcoin Treasury Companies can no longer increase their Bitcoin per share purely via market operations such as issuing more equity. In this world, companies could only increase their Bitcoin per share by being profitable and converting these profits into Bitcoin on their balance sheets. Here, P/BYD would still work as a metric and would simply capture how profitable a company is relative to its market valuation, much like a conventional PE ratio.
What's next?
As long as Bitcoin is successful, placing Bitcoin on a companies balance sheet for the long term will remain a sound strategy and Bitcoin treasury companies will be here to stay. The greatest unknown is the 4th item in the valuation framework above. Whilst some will accuse the framework for those with smaller operating businesses as resembling a ponzi scheme, the valuations also reflect the inevitable and increasing appetite of wider asset class owners (equities, preference shares) for increased Bitcoin exposure when they can’t hold Bitcoin directly. In some respects it is also part of the speculative attack on fiat currencies as predicted by Pierre Rochard over 10 years ago.
What we’ll see in the coming months and years is the extent to which some of these companies can further tap the capital markets and seek to further increase bitcoin per share in new ways, for example by issuing preference shares which are over collateralised by their Bitcoin. In this respect Strategy leads the way again, having launched all 4 of its various preference shares this year and raised around $6.2bn. Metaplanet has recently announced plans to follow suit, and others will undoubtedly follow.
This is a guest article by Bitcoin Actuary / BitcoinActuary@BitcoinNostr.
The above article should not be construed in any way as investment advice and the opinions expressed do not necessarily reflect the views of Twenty One Collective Ltd. The author owns both Bitcoin and shares in Strategy, Metaplanet, and Smarter Web Company.