Author: Sean Kiernan, CEO of Greengage
Compiled by: Felix, PANews
Currently, more than 160 publicly listed companies have adopted Bitcoin as a core reserve strategy, collectively holding nearly 1 million Bitcoins, accounting for approximately 4% of the circulating supply. What initially began as a bold experiment by one company has now evolved into a globally embraced strategy: raising capital, purchasing Bitcoin, and offering partial Bitcoin equity exposure through listed instruments. The trading of these stocks is not based on profitability or cash flow but rather on their ability to deliver Bitcoin per share, with most companies trading at market values higher than their net asset value, or in today’s terms: at a premium exceeding one times ‘mNAV’ (market value to net asset value). The question is no longer whether the Bitcoin reserve model can be implemented, but what risks and opportunities lie ahead?
Phase One: From Narrative to Imitation
The emergence of Bitcoin treasury companies was defined by narrative and imitation. Michael Saylor’s strategy (originally MicroStrategy) demonstrated that raising equity at a premium to asset value, converting it into Bitcoin, and never selling could transform a software company into a $100 billion Bitcoin proxy.
This model has been widely imitated, from Metaplanet in Tokyo to Semler Scientific, a U.S. healthcare company, to Smarter Web Company in London. However, relying solely on storytelling and holding Bitcoin may make sustaining high premiums challenging. To transition this model through its ‘adolescence,’ companies may need to justify their above-one asset valuation multiples in a more enduring manner.
The Next Leverage for Bitcoin Treasury Companies
Leverage One: Yield Advantage
Just as real estate investment trusts (REITs) transitioned from landlords to yield-generating machines, Bitcoin treasury companies must demonstrate their ability to achieve incremental growth in Bitcoin per share rather than merely hoarding Bitcoin.
This could be achieved through loans collateralized by Bitcoin, Lightning Network infrastructure, or potentially new financial products that monetize holdings on the balance sheet. For example, locking Bitcoin into payment channels on the Lightning Network allows holders to earn fees by providing liquidity, creating potential yield. However, all yield strategies carry risks, such as credit risk and counterparty risk, which need to be carefully considered and managed. Without a yield engine, dilution may eventually catch up, and mNAV could compress to 1.
Lever Two: Risk-Weighted Leverage
In the last bear market, the winners were not the companies with the largest balance sheets, but those that could withstand forced liquidation through capital structure design. Currently, some Bitcoin treasury companies are considering using Bitcoin as collateral to secure dollar-denominated loans. These dollars can then be deployed at the company’s discretion, such as generating returns or purchasing more Bitcoin. However, this activity requires strict risk management and cash flow and scenario modeling. Leverage amplifies this reflexive flywheel effect but requires discipline: raising funds only at a premium, never operating on hard collateral, and maintaining sufficient duration to weather cycles.
Lever Three: Complementary Business Models
The third lever is providing complementary business models, akin to ‘picks and shovels’ in the Bitcoin economy. Some Bitcoin treasury companies have begun venturing into infrastructure areas: data centers, decentralized artificial intelligence computing, Bitcoin-native software, or business services.
This dual model enables them to transition from pure net asset value arbitrage to platforms with operational cash flows. This not only makes them no longer mere substitutes for Bitcoin but also growth-oriented equity stories. This is analogous to companies from the internet era that eventually grew into infrastructure giants of today’s tech industry, often sitting on substantial cash reserves themselves: Apple, Amazon, Google, Facebook, and others.
Towards Professionalization and Institutionalization
The introspective phase regarding the Bitcoin fund management model is nearing its conclusion. As this process slows, companies are professionalizing their Bitcoin reserve strategies: designing resilient capital structures, potentially generating Bitcoin returns without diluting per-share exposure, and developing business lines connected to broader digital asset infrastructure.
Successful enterprises may justify long-term premiums over net asset value, consolidate their shareholder base, and emerge as counterparts to real estate investment trusts, technology giants, or energy conglomerates within the Bitcoin space. Meanwhile, stagnant firms risk becoming irrelevant, trading like closed-end funds on stock exchanges with no prospects for growth.
Next Phase: Beyond Buying Bitcoin
The next phase for Bitcoin treasury companies will likely no longer be about purchasing Bitcoin (that script has already been written) but about constructing financial frameworks to ensure mNAV remains above 1 through successive cycles.
Those companies that have cracked this problem will not just be proxies for Bitcoin. They may become the equity layer of a new monetary system.
Further reading: Good, Average, Bad: Six Scenarios Analyzing the Final Outcomes of Crypto Treasury Companies
