{"id":4586,"date":"2025-08-15T20:16:48","date_gmt":"2025-08-15T20:16:48","guid":{"rendered":"https:\/\/digkrypton.com\/index.php\/2025\/08\/15\/how-to-think-about-bitcoin-treasury-companies-a-bitcoiners-dilemma-in-the-age-of-rampant-speculation\/"},"modified":"2025-08-15T20:16:48","modified_gmt":"2025-08-15T20:16:48","slug":"how-to-think-about-bitcoin-treasury-companies-a-bitcoiners-dilemma-in-the-age-of-rampant-speculation","status":"publish","type":"post","link":"https:\/\/digkrypton.com\/index.php\/2025\/08\/15\/how-to-think-about-bitcoin-treasury-companies-a-bitcoiners-dilemma-in-the-age-of-rampant-speculation\/","title":{"rendered":"How to Think About Bitcoin Treasury Companies: A Bitcoiner\u2019s Dilemma in the Age of Rampant Speculation"},"content":{"rendered":"

Bitcoin Magazine<\/a><\/p>\n

How to Think About Bitcoin Treasury Companies: A Bitcoiner\u2019s Dilemma in the Age of Rampant Speculation<\/a><\/p>\n

<\/div>\n

Strategy, Michael Saylor and MSTR have taken over Wall Street. To many people\u2019s chagrin, the suitcoiners and corporates are here: Bitcoin held by corporations in the form of bitcoin treasury companies is hypnotic to look at. It has captured more or less everyone\u2019s mind<\/a> \u2014 mine, included.<\/p>\n

It\u2019s the latest fad on the world\u2019s capital markets, celebrated by a narrow sway of financially savvy Bitcoiners and insiders, yet hated by tradfi people<\/a> who can\u2019t for the love of humanity understand why anybody<\/em>, let alone a company, would want bitcoin<\/a> at all. Every odd Bitcoin podcaster has joined one or more bitcoin treasury companies as investors or advisors\u2026 or, to put their role more bluntly: as glorified marketers posing as retail-delivery systems.<\/p>\n

Over the last few months, I\u2019ve spent hundreds of hours<\/em> investigating bitcoin treasury companies. I\u2019ve read reports and explainers, bull-ish puff pieces and in-the-weeds descriptions<\/a>. I\u2019ve thought deeply about the financial-market logic behind them. I\u2019ve edited excellent articles pushing the rationale<\/a> for<\/em> treasury companies, and overseen equally superb arguments against<\/em> them<\/a>.\u00a0<\/p>\n

In some small ways, I\u2019ve even fallen prey to them; I\u2019m not as aggressively opposed to them as I gave voice to in the June 2025 article (\u201cAre Bitcoin Treasury Companies Ponzi Schemes?\u201d<\/a>) that was, incidentally, shoved before Michael Saylor on Fox Business last week.\u00a0<\/p>\n

\n

Beautiful, @FoxBusiness<\/a> @saylor<\/a> @Strategy<\/a> pic.twitter.com\/GnhLt6gWF2<\/a><\/p>\n

\u2014 Joakim Book (@joakimbook) August 4, 2025<\/a>\n<\/p><\/div>\n

Here\u2019s what I\u2019ve learned from all of this.\u00a0<\/p>\n

What\u2019s a Sane, Normal, Regular Bitcoiner To Do?\u00a0<\/strong><\/h2>\n

The easiest way to go about bitcoin treasuries and financialized bitcoin is to simply ignore everything. Before Enlightenment: chop wood, hodl self-custody bitcoin; after Enlightenment: chop wood, hodl self-custody bitcoin<\/em>. Only time will tell if these financial vehicles, loaded with corporate-wrapped bitcoin and soft-spoken CEOs, will succeed or spectacularly blow up.\u00a0<\/p>\n

But in topics of money and finance (and economics more broadly), there is usually no nice, neutral choice, no non-action; my money and savings must go somewhere, my attention and labor be focused on something<\/em>. New bitcoin treasury companies are launched weekly<\/a>; aggressive fund raises or purchases are announced daily. Being <\/em>in this space, having an opinion becomes inevitable; having a good, well-informed one seems almost a moral imperative.\u00a0\u00a0<\/p>\n

Having spent years diving into the weeds of monetary economics, financial history and now the wild financial frontier of Bitcoin, the intellectual path to tread here is quite narrow. One side promises a fast-track to the hyperbitcoinized future we all envision, with corporate charters merely amplifying my sats on the way; the other, a cesspool of financial engineering and a hive of speculative mania quickly lining up Bitcoiners to have their fiat contributions repurposed as bitcoin yield.\u00a0<\/p>\n

\n

$MSTR<\/a> trades at a premium to Bitcoin NAV due to Credit Amplification, an Options Advantage, Passive Flows, and superior Institutional Access that equity and credit instruments provide compared to commodities. pic.twitter.com\/AYQlytS4ID<\/a><\/p>\n

\u2014 Michael Saylor (@saylor) August 13, 2025<\/a>\n<\/p><\/div>\n

Why Would a Bitcoiner Get Involved with These Companies?<\/h2>\n

One reason is leverage. As a typical millennial<\/a>, I don\u2019t have a house and thus no easy access to cheap debt (basically the only<\/em> reason<\/a> to own a home<\/a>).\u00a0<\/p>\n

I can<\/em> collateralize<\/a> my coins via e.g., Firefish<\/a> (at 6-9% APR), or draw on my credit cards (11% and 19%, respectively). Those terms aren\u2019t great; they come with a hefty price tag, a pretty small capital pool and they\u2019re not cheap. Even if bitcoin CAGRs at 30-60%, that\u2019s over longer time periods \u2014 not monthly or annually, which is the cadence at which I have to service these types of debt.\u00a0<\/p>\n

In contrast, Strategy<\/a> and MARA issue convertible debt at 0%. Those<\/em> liabilities come due in a half-dozen years, and they\u2019re in the nine-figure range. Said Pierre Rochard in debating Jim Chanos<\/a> last month:\u00a0<\/p>\n

\u201cThe ability to access the terms that Saylor has\u2026 is not accessible to individuals holding Bitcoin in cold storage.\u201d\u00a0\u00a0<\/p>\n

For most Bitcoiners, getting in on this action is proving too juicy to resist\u2026 even if <\/em>you need to fork over control and ownership, and additionally pay a hefty premium over their current bitcoin stash for the privilege of owning some of these shares.\u00a0\u00a0<\/p>\n

As a leverage mechanism, Saylor\u2019s turn into preferred shares seems much more expensive \u2014 paying 8-10% interest is approaching my own borrowing abilities \u2014 but they\u2019re way<\/em> safer.\u00a0<\/p>\n

The prefs safeguard the company itself<\/em>, since they remove the risk of margin calls or debt-fuelled bankruptcy concerns, and give the company unprecedented flexibility. Preferred shares provide a release valve, since Strategy can opt not<\/em> to pay the dividends for e.g., STRD; doing the same for STRF<\/a> \u201conly\u201d costs them a 1% penalty going forward. In a pinch, and without much implication for the company itself, Strategy can even withhold payment for the others (at the risk of zeroing out the bondholder bagholder, and making plenty of people plenty angry).<\/p>\n

\n

$MSTR<\/a> is basically unbreakable. <\/p>\n

As long as BTC grows faster than the preferred yield (>10%), Strategy can keep stacking and issuing more preferreds. <\/p>\n

If BTC hits 30% ARR like Saylor predicts, $MSTR<\/a> will become one of the biggest companies in the world.<\/p>\n

If BTC slows to 15%\u2026<\/p>\n

\u2014 BTCoptioneer (@BTCoptioneer) August 6, 2025<\/a>\n<\/p><\/div>\n

Here\u2019s the paradox: While this is financial leverage for Strategy, which gets more and more of other people\u2019s money to plunge into bitcoin and top up their<\/em> stash, it isn\u2019t<\/em> leverage for (new) shareholders of MSTR.\u00a0<\/p>\n

To invoke Jim Chanos\u2019 answer to Rochard in that debate: the point of leverage is to have more<\/em> than $1 of exposure. If I buy MSTR at mNAV 1.5, and Strategy itself has a leverage ratio of about 20%, I\u2019m not levering up!<\/em><\/strong> <\/strong>(1\/1.5 x 1.2 = 0.8). Thus, for every $1 I plunge into MSTR, I\u2019m getting about 80 cents of bitcoin exposure. And the corporation, of which that share is a portion, still needs to pay about<\/em> what I pay my financiers for the pleasure of using someone else\u2019s money.<\/p>\n

The calculations for most of the other treasury companies<\/a> get even worse<\/em>, mostly because of their excessive mNAV. You are the yield that the bitcoin treasury companies are chasing<\/em><\/a>.<\/em> When we invest in these companies, we play fiat games. And we play them directly in proportion to how expensive the mNAV is. I\u2019ve asked<\/a> many times:\u00a0<\/p>\n

\u201cHow<\/em> can a bitcoin, wrapped in a corporate charter, suddenly be\u00a0worth<\/a>\u00a0double, triple, or ten times\u00a0the most liquid, observable and obviously indisputable price on the planet?\u201d\u00a0<\/p>\n

Indeed,\u00a0<\/p>\n

\u201cWhat extreme value-added transformation does our orange coin undergo the moment you take it under your financially leveraged wings and promise to issue debt, preferred stock, and equity against it \u2014\u00a0in \u201cwaves of credit bubbles,\u201d we hear the ghost of Satoshi faintly whisper.<\/em>\u201c<\/p>\n

Strategy\u2019s great discovery \u2014 which everyone is now head-over-heels copying \u2014 is that wrapping a bitcoin in a corporate shell, smashing some leverage on top of it, and selling it on Wall Street somehow makes that same bitcoin worth multiples of its actual market price.\u00a0<\/p>\n

Much of the conversation ends there, with tradfi journalists busy dismissing this as a fad or a bubble; per the efficient market hypothesis, or just common sense, nothing should trade above<\/em> the price of the only thing it holds.\u00a0<\/p>\n

Not enough. Let\u2019s tally some quite sound reasons<\/a> for why corporate stocks doing nothing but acquiring bitcoin ought to be worth more<\/em> than the bitcoin they hold:\u00a0<\/p>\n

Storage<\/strong>. Self custody<\/a> is easier than you think, but plenty of people still shy away from it (see: ETFs<\/a>). An additional weird reason is the high-profile wrench-attacks on Bitcoiners across the world; it\u2019d be reasonable to pay some<\/em> sort of premium for letting someone else store your coins. Can\u2019t wrench-attack my MSTR shares<\/em>. Saylor seems to know what he\u2019s doing (though custodying with Coinbase<\/a> has raised some eyebrows<\/a>), so let\u2019s \u201cstore\u201d our bitcoin with his company. 10%.\u00a0<\/p>\n

Futures<\/strong>. Future bitcoin is worth more than present bitcoin. At any given time, there are unannounced treasury company purchases accruing to shareholders but that aren\u2019t yet public information. Whenever you purchase shares you\u2019re only aware of the deals or acquisitions not yet made public\u2026 but we all know, and can predict, that shares should trade a little higher than they currently do: You\u2019re always trading shares on present<\/em> information, knowing full well that there are things behind the scenes resulting in more. That\u2019s presumably worthy of some premium, so: 5% for e.g., Strategy; plenty more for the small and aggressive ones.<\/p>\n

Regulatory arbitrage<\/strong>. Look, says the bulls, there is all this money<\/em> out there, desperate to buy bitcoin but just aren\u2019t allowed to. I don\u2019t quite believe that: Not that<\/em> many people or institutions are keen on orange, and even if they were, whatever premium we wish to attach to this taxation-mandate-401(k)<\/a>\u2013regulatory<\/a> hurdle, it\u2019ll decay with time and adoption. The same financial incentives and laws of gravity that justify bitcoin treasury companies working at all also work to undermine the very regulatory obstacles that give them value<\/em> in the first place<\/em>. 20%.
(For some, such as Metaplanet in Japan<\/a>, where bitcoin investors face excessive capital gains taxes, that arbitrage premium is worth more than that.)\u00a0<\/p>\n

Catch-all. <\/strong>I\u2019m probably missing some additional reason \u2014 some of these companies have residual, real-world businesses too \u2014 for why a bag of bitcoin ought to be worth more than the bitcoin inside the bag\u2026 so let\u2019s just add another 20% here.\u00a0<\/p>\n

Sum: <\/em>10+5+20+20 is 55\u2026 and conveniently about<\/em> where MSTR traded<\/a> when I first handwaved together these premium justifications. At a bitcoin price<\/a> of $122,500, the 628,791 BTC on Strategy\u2019s balance sheet is worth about $77 billion, but the market capitalization of the firm is $110 billion (~45%<\/strong> premium).\u00a0<\/p>\n

\n

$MSTR<\/a> trades at a premium to Bitcoin NAV due to Credit Amplification, an Options Advantage, Passive Flows, and superior Institutional Access that equity and credit instruments provide compared to commodities. pic.twitter.com\/AYQlytS4ID<\/a><\/p>\n

\u2014 Michael Saylor (@saylor) August 13, 2025<\/a>\n<\/p><\/div>\n

Strategy is a Bank: The Economic Vision<\/h2>\n

Not the kind that takes (bitcoin) deposits and issues (bitcoin) mortgages, but another, more deeply economic kind.<\/p>\n

You can think of banking as one of society\u2019s risk-sharing mechanism. Society advances loans to some risky ventures, and capital markets \u2014 of which the banking system is one part \u2014 distribute the levels of risk stemming from them. (A financial \u201cWho Gets What and Why<\/a>,\u201d basically.)<\/p>\n

A bank<\/em>, economically speaking, is an institution that takes on that risk having some non-public information about the entities involved; it distributes a small, guaranteed return to the lender, while it, itself, gains from any successful venture \u2014 though not by as much as the equity owner themselves. If the bank does this successfully, i.e., it on average picks successful ventures and earns more in interest on credit-worthy loans than it pays on interest to depositors, it makes profits for itself.<\/p>\n

This is what Strategy is doing, using the undiscovered zone between the bitcoin world and the fiat world.<\/strong>\u00a0<\/p>\n

Tradfi institutions, pension funds or retirees are the bank-financing component of the structure. They \u201cdeposit\u201d money in Strategy, with returns and terms determined by the specific tranche they choose (STRK, STRD, STRF, STRC, or residual claimant in common stock, MSTR).<\/p>\n

The bank invests these funds in assets: Strategy sits in the middle, guaranteeing the payouts to these economic entities by predicting that the assets will pay off more than the stated interest on the \u201cbank deposits.\u201d Rather than a bank lending on mortgages and credit cards and to small businesses, Strategy\u2019s \u201clending\u201d side consists of a single client: the world\u2019s best-performing asset. What Strategy is doing is making the (very sensible) gamble that bitcoin will increase in dollar terms faster than the 8-10% it has to pay tradfi fiat institutions for the privilege of using their money.\u00a0<\/p>\n

Any middle-schooler with a calculator can figure out that infinite riches await if you\u2019re borrowing at 10% per year to hold an asset that appreciates by 40% a year.\u00a0<\/p>\n

Naturally, bitcoin doesn\u2019t <\/em>do nice, comfy, 40%-a-year. If that were the case, per Michael Saylor\u2019s own words<\/a>, Warren Buffett would have snatched up aaaaall the bitcoinz <\/em>long ago:\u00a0<\/p>\n

\u201cIf bitcoin was not volatile, people with more money than you, more power than you, would outbid you for the bitcoin; you couldn\u2019t have it\u2026 At the point that it becomes completely predictable, Warren Buffet will say \u2018oh yeah; we get it; we just bought all the bitcoin\u2019\u2026 and your opportunity is gone.\u201d<\/p>\n

All that Strategy need to ensure is that the financing won\u2019t bankrupt it; that the issuance is well under its control and discretion; that dividend payments are conservatively enough compared to the net capital it holds (i.e., bitcoin); and, most importantly, that the liabilities aren\u2019t callable <\/em>such that they\u2019d force the company company to sell bitcoin at inopportune moments.<\/p>\n

Basically, Saylor created a vehicle exceedingly suited <\/em>to make his way through extreme downturns. Even 80% falls in bitcoin \u2014 the worst of its kind<\/a>, and it\u2019s certainly questionable whether those will ever happen again, given the size and public availability of the asset \u2014 won\u2019t stifle the company. The key to a successful Ponzi<\/a> is that the money must keep rolling in. More precisely, Strategy is conservatively Ponzi-like in its financing<\/em> (unlike classic \u2014 fraudulent \u2014 Ponzis schemes, Saylor isn\u2019t running a fraud; the optics just overlap<\/a>, and nobody is defrauded\u2026 unwillingly, anyway).\u00a0<\/p>\n

What neither tradfi journalists nor treasury company-skeptic Bitcoiners have formulated well is how<\/em> exactly these schemes fall apart. For \u201cEconomic Forces,\u201d economist Josh Hendrickson<\/a> outlines precisely the relevant stumbling blocks: \u201cIf markets are segmented<\/strong> and there is an expectation that the price will continue to experience rapid appreciation, this makes the present discounted value of a future liquidation could exceed the current liquidation value. If the stock is selling at its current liquidation value, it is underpriced.\u201d And:<\/p>\n

\u201cwhat MicroStrategy has done is turn itself into a bitcoin bank by issuing dollar-denominated liabilities and purchasing bitcoin. The company is explicitly engaged in financial engineering to exploit regulatory arbitrage.\u201d<\/p>\n

Strategy\u2019s model, but more so the other copy-cats given their respective jurisdictional moats<\/a>, can thus break if<\/em>:<\/p>\n

Investors are wrong about the future trajectory of bitcoin\u00a0<\/p>\n

Whatever mandates, tax rules and legal obstacles that currently prevent investors from buying bitcoin directly loosen up<\/em><\/p>\n

The flywheel effect, so imaginatively dubbed by the Twitteratis of the Bitcoin world, is the ability to exploit regulatory arbitrage, which, in turn, \u201cis contingent upon investors maintaining this expectation that bitcoin is going to be worth considerably more in the future,\u201d in Hendrickson<\/a>\u2019s very academic, economistic words.\u00a0<\/p>\n

Shareholders and buyers of the preferreds won\u2019t be happy in the event of nonpayment of the dividend. Shareholders of MSTR itself will be unhappy if they\u2019re diluted merely to satisfy bondholders (or worse, and Ponzi-like<\/a>) pay the interest to preferreds. But so what<\/em>? It doesn\u2019t break Strategy<\/em>.<\/p>\n

What will break the model is the disappearance of these tradfi-to-bitcoin obstacles. It\u2019s the regulatory hurdles that propelled so many of these companies forward; turned them to financial bridges between the new world and the old; made them vacuum up unproductive<\/a>, low-yielding<\/a> capital from all over the world and suck it into bitcoin.\u00a0\u00a0<\/p>\n

If fund managers or treasury departments or family offices routinely stack bitcoin instead of various Strategy products (or securities of Strategy copy-cats, as the case may be in different parts of the world), the primary reason for bitcoin treasury companies go away.\u00a0<\/p>\n

The existence of bitcoin treasury companies, in short, hinges on the inertia of the present system. It depends, crucially, on family funds and pension funds, sovereign wealth funds and traditional investors not<\/em> doing the hard work of figuring out actual<\/em> bitcoin exposure (plus some safe, conservative leverage). If they don\u2019t do that, and instead prefer to overpay 50% for the privilege, then\u2026 yes<\/em>, the bitcoin treasury companies\u2019 business models are forever sustainable.\u00a0<\/p>\n

What Else Can Go Wrong?<\/h3>\n

There\u2019s a custodian risk for Strategy, certainly, with its coins with various custodians, and in solutions that are purposefully kept pretty opaque<\/a>. What happens to Strategy\u2019s business if e.g., Coinbase goes bankrupt? Or worse, new political winds bring in confiscation and\/or aggressive taxation metrics?<\/p>\n

Fair enough, these are tail risks but risks nonetheless.\u00a0<\/p>\n

And \u2014 it\u2019s almost trivial to point this out \u2014 if Bitcoin somehow fails, obviously<\/em> Strategy fails with it. If bitcoin stays a $118,000 stablecoin forever, most of Strategy\u2019s opportunistic use of plentiful financial capital becomes almost moot, and it\u2019ll trade like the pot of bitcoin most journalists and many analysts think it is, its extraordiary growth (mostly) evaporated.\u00a0<\/p>\n

And I think that<\/em>\u2019s what trips up so many journalists<\/a> and analysts<\/a> when looking at this treasury company phenomenon: If you can\u2019t see how or why bitcoin<\/em> would ever have value or use, let alone a place in the future of money and finance, then obviously a corporation devoted to acquiring as much bitcoina as it can makes no sense at all<\/em>.<\/p>\n

If you do <\/em>see a use and future for bitcoin, its price ever-growing against an ever-declining fiat, a corporate vehicle dedicated to acquiring more by wielding capital markets money flows becomes a whole other proposition.\u00a0<\/p>\n

The Hedge and The FOMO: What If I\u2019m Wrong?<\/h2>\n

Intellectual humility forces us to realize that maybe, just maybe<\/em>, we got something wrong.\u00a0<\/p>\n

Diamond hands are continually forged\u2026 and mine remain pretty weak. It usually really troubles me when the bitcoin price drops precipitously. (It\u2019s the sudden extreme of it, I believe, that\u2019s a big deal\u2026 and I find it hard to account for it even in hindsight<\/em>).<\/em> I act recklessly, lash out \u2014 and not infrequently YOLO into lows with rent money or other pools of spare cash that really shouldn\u2019t go into bitcoin.\u00a0<\/p>\n

In bull markets, that kind of behavior usually works to my benefit\u2026 but one day it won\u2019t. Morgen Rochard, on one of these endless<\/a> appearances<\/a> on the Bitcoin podcast circuit, hammered home this point. (I sometimes say that Morgen has, paradoxically, convinced me to hold less<\/em> bitcoin than I do\u2026 sleep calmly at night, be stoic in the face of price moves<\/a>, etc, etc.)\u00a0<\/p>\n

The more I learn about Strategy, the more I\u2019m warming up to its many specially catered products. It makes some<\/em> semblance of sense for me to own e.g., STRC for short-term cash and STRK for muted bitcoin exposure with cash flow. STRK, financially speaking, is like holding bitcoin twice financially removed; short-term movements in short-term price would be much less extreme and it would pay me a bit of additional fiat side income.<\/p>\n

Given that my net worth and professional engagements are mostly tied to bitcoin and correlated to bitcoin price, having slightly less<\/em> of my net worth in this one-stop-shop area makes sense.<\/p>\n

Why Not Just Hold Cash in a High-Yield Savings Account?<\/h3>\n

Good question. Two reasons: they don\u2019t yield very much\u2026 checks notes<\/em>\u2026 4.05% on my \u201chigh-yield\u201d dollar account. Saylor\u2019s equivalent product, STRC<\/a>, targets a rate hundreds of basis points above that; and STRK, which in the medium term approximates bitcoin itself, discounted or amplified by changes in MSTR\u2019s mNAV (since at MSTR = $1,000, ten STRK converts), currently yields over 7%. Second, knowing myself, I\u2019m pretty sure I\u2019ll just plunge cash balances held in a fiat bank account into bitcoin at the first sign of a significant price dump; holding STRC or STRK in a brokerage account would at least raise the barriers to that<\/em> sort of imprudent behavior.\u00a0<\/p>\n

\n

You only really need to own two assets now. <\/p>\n

Bitcoin and $STRC<\/a>.<\/p>\n

Financial planning got a whole lot easier.<\/p>\n

\u2014 James Van Straten (@btcjvs) August 9, 2025<\/a>\n<\/p><\/div>\n

Hedges\u2026 Hedges Everywhere<\/h3>\n

Since I\u2019m already structurally short fiat \u2014 per the original Speculative Attack<\/a>, I hold debt and<\/em> bitcoin, so I\u2019m leveraged long \u2014 it makes sense to\u2026 deep breath\u2026 <\/em>diversify<\/a>, just a little bit!\u00a0<\/p>\n

I already routinely max out the pension contribution that my jurisdiction local mafia already forces me to pay into. The funds inside that permissioned wrapper invest broadly in stocks and bonds (roughly 75:25 proportion); compared to any sort of bitcoin comparison, these of course perform awfully<\/em>, but in case I\u2019m somehow \u2014 for some unimaginable reason \u2014 wrong about this whole money-printing, central banking-end-of-an-era thing, at least I won\u2019t starve in old age:\u00a0<\/p>\n

\n

I think of that contribution as <\/p>\n

1) tax minimisation (I hate the gov profoundly, suffer enormous displeasure at every cent forked over)
2) A form of hedge in case I’m big-time wrong on this orange revolution (my work, employment,and net worth is already heavily dominated by BTC)<\/p>\n

\u2014 Joakim Book (@joakimbook) June 28, 2025<\/a>\n<\/p><\/div>\n

Second, contributing to it comes with massive tax perks: Maxing out the contribution gives me some 1.5x the money right off the bat. While those additional funds will be outgrown by bitcoin\u2019s routine ~40% CAGR in less than two years, they also come with tax-free mortgage perks; should I want to get myself a house real-world shitcoin someday, I can use this pot of money for the occasion.\u00a0<\/p>\n

The bitcoin-opportunity cost is real, and over time quite debilitating, but this isn\u2019t a matter of conviction. Real-world practicalities rule: It makes a world<\/em> of difference for how you live your life<\/a> if hyperbitcoinization happens in a week or in a hundred years.\u00a0<\/p>\n

What has any of this got to do with bitcoin treasury companies?!<\/em><\/p>\n

Plenty: because the hedging mentality of \u201cwhat if I\u2019m wrong about this\u201d prevails here as well.<\/p>\n

For all the fluff and fancy verbiage, all the new metrics and futuristic moon dreams, I still can\u2019t get past why a bitcoin when wrapped in a corporate charter should be worth more<\/em> than a bitcoin. Yes, yes, net-present-value of future growth, yield, capital arbitrage, speculative attack, and bet on hyperbitcoinized banking but\u2026 really?!<\/em><\/p>\n

OK, so what if I\u2019m wrong? Plenty<\/em> of people I trust in the Bitcoin space vouch for these things \u2014 more by the minute, it feels like \u2014 and there is<\/em> some logic to them. Cheap leverage, speculative attack, tapping into (read: tricking) fiat pools of money to flow into bitcoin.\u00a0<\/p>\n

\u2026so I FOMO\u2019d into two treasury companies recently: Two Strategy products (MSTR and STRK) and the Swedish small newcomer H100<\/a>.<\/p>\n

It\u2019s Nice to Have Stocks Again\u2026<\/h2>\n

A decade or more ago, I used to hold plenty of stocks \u2014 large, well-diversified portfolios<\/a>, meticulously tracked. For years<\/em> now, and for obvious reasons, I haven\u2019t held any.\u00a0<\/p>\n

I decided on Strategy\u2019s stuff because they are the least financially insane in this space; the second one because I had easy access via my old-time Nordic<\/a> bank accounts \u2014 and I wasn\u2019t going to bother with finding a convenient brokerage, sign papers and transfer funds, in order to maybe<\/em> play with a few hundred bucks of bitcoin treasury funds. There\u2019s enough ridiculous paperwork in the world<\/em>.\u00a0<\/p>\n

On the off chance that these things amount to anything, Strategy will be there, running the show: MSTR is \u201camplified bitcoin<\/a>,\u201d as their marketing says. Since most of my savings are orange-clad and my professional life is deep orange, once more, that sort of diversification makes sense. (Plus, the mNAV for MSTR is quickly approaching one\u2026 1.42 as I\u2019m writing this.)\u00a0<\/p>\n

With Emil Sandstedt\u2019s words ring in my ears \u2014 I understand that I<\/em> am<\/em> the BTC yield they\u2019re after \u2014 but at 25%-ish BTC yield and 20% (safe) leverage via the prefs and convertibles, I\u2019ll be back at even exposure about this time next year: My ~150 dollars\u2019 worth of MSTR shares currently provide about 120 dollars\u2019 worth of bitcoin exposure; I\u2019m happy to throw in the extra $30 bucks for the financial empire Mr. Saylor is erecting (and the potential growth in bitcoin-per-share<\/a>).\u00a0\u00a0<\/p>\n

Second, H100. The mNAV here was also pretty acceptable for a small, nimbly, fast-moving and uniquely jurisdictionally<\/a> dominant player \u2014 at 2.73, ugh<\/em> \u2014 but its low days-to-cover rate<\/a> makes me feel that I won\u2019t get too<\/em> shafted.\u00a0<\/p>\n

My first realization after buying some: I\u2019d forgotten how much fun it is!<\/em> <\/p>\n

Suddenly, I\u2019m tracking several different asset prices instead of just one. Suddenly, I\u2019m financially in cahoots with real companies doing real things (\u2026ish<\/em>, anyway), rather than just the most portable, global and easily accessible money there ever was. Psychologically, I felt part<\/em> of something \u2014\u00a0vested<\/em> in the venture, the speculative attack<\/a> and bitcoin yield-curve construction project that is treasury companies. How exciting!<\/em><\/p>\n

Second realization: Bitcoin has messed with clarified the meaning of ownership<\/em>.\u00a0<\/p>\n

None of these instruments are mine<\/em>; they\u2019re wrapped in layers of permissioned custody.<\/strong> I can sell them<\/em> at the press of a button (from nine to five, Mondays through Fridays\u2026), but I only ever see any of that value if
a) the brokerage cooperates
b) the bank that receives the payout cooperates, and
c) the government doesn\u2019t block the transactions.\u00a0<\/p>\n

It is one step worse<\/em> than what Knut Svanholm elegantly remarks on<\/a> in Bitcoin: The Inverse of Clown World<\/em><\/a>:<\/p>\n

\u201cA bank is akin to a 2-of-3 multi-sig wallet where you, the bank, and the government hold one key each. In other words, money in the bank is not really yours. Nor is it really money at all.\u201d<\/p>\n

\u2026Or Not So Nice to Have Stonks<\/h2>\n

I quickly got myself a few reminders of the intransparent, altogether ridiculous and bureaucratic nightmare stock \u201cownership\u201d is. After I had transferred funds to the brokerage last month, found STRK and pressed \u201cbuy,\u201d I received an error message: \u201cThis security is not available to you.\u201d<\/em>\u00a0<\/p>\n

Turns out I wasn\u2019t eligible to own American securities through that brokerage.\u00a0<\/p>\n

Tradfi assets are so intransparent and so darn permissioned<\/a>. And the reminders of this obsolete value-technology kept coming. Obviously, it took a day or two for that \u201cinvestment\u201d to go -11%, reminding me that I still<\/em> know nothing about fair valuation or timing the market. (Then again, bitcoin puked off 5% from its then 2-week 118,000 stablecoin pattern<\/a>, so the opportunity cost was somewhat muted.)<\/p>\n

It got worse when trudging through the lower-level sludge of bitcoin treasury companies: the two Swedish penny stocks that have made noise (H100, and K33; I had to buy something<\/em> with the money intended for STRK) instantly fell 10% and 20% respectively \u2014 basically from the moment I touched them. Some experiment.\u00a0<\/em><\/p>\n

To paraphrase an old Wall Street adage, an idiot and his sats are soon separated<\/strong>\u2026 and the present idiot doesn\u2019t even have any new, shiny things to show for it because \u2014 newsflash!<\/em> \u2014 stocks are custodial and immaterial! They reside in a brokerage firm\u2019s database, and by extension, a company ledger somewhere. They\u2019re not physical\u2026 and they\u2019re not even really mine<\/em>! I can\u2019t spend them, move them, back them up or recover them to a different wallet. They\u2019re stuck where they are, dead stock<\/em> in Adam Smith\u2019s famous phrasing<\/a> regarding money.\u00a0\u00a0<\/p>\n

Instead, I set aside some other fiat funds in my regular banking app and impulse-bought MARA (MSTR is available there, but no other Strategy instruments); while MARA is issuing stocks and convertible debt to stack sats like yet another treasury company, at least it\u2019s an underlying operating business (mining) \u2014 and their mNAV is around 1, so I don\u2019t pay a premium for their financial-market, cost-of-capital arbitrage-ish play. \u00a0<\/p>\n

How, Just HOW, will Bitcoin Treasury Companies Fail?<\/h2>\n

\u201cThere\u2019s a real possibility we have, like, a dot-com style boom-and-bust cycle in this public equity world.\u201d
Danny Knowles, May 28, \u201cWhat Bitcoin Did<\/a>\u201d<\/p>\n

Strategy is bulletproof.\u00a0<\/p>\n

As Lyn Alden\u2019s question<\/a> in the Strategy Q2 earnings call<\/a> illustrated, even in an 80% bitcoin drawdown<\/em>, Strategy will be fine. The company was in a much<\/em> worse position during the 2022 bear market when its bitcoin was directly tied to margin loans and collateral for bank debt. That\u2019s not the case in 2025 when preferreds run the show.\u00a0<\/p>\n

Looking past the occasional tradfi analyst or journalist obsession with mNAV, or why<\/em> a company should be valued above the bitcoin it holds, and the pearl-clutching, inside and outside Bitcoin over using debt for acquiring more bitcoin, Strategy is unbelievably conservatively financed.<\/strong> The company holds bitcoin worth some $77 billion; the convertible debt amounts to about $5 billion ($8 billion, really, but some of them are deep in the money and trade as equity, not debt, at this point). There\u2019s a little over $6 billion of preferred stock outstanding across STRK, STRD, STRF and STRC. (That makes the company about 15% levered, meaning bitcoin would have to drop by over 85%<\/em> for the company to have any <\/em>sort of solvency problems.)<\/p>\n

Another avenue for problems is if tradfi money market capital dries up. Strategy\u2019s ability to overperform bitcoin by generating increasing bitcoin per share depends on some combination of lower\/safer cost of capital (or better terms on its debt) or tapping the above-1 mNAV (instantly accretive since it lets Saylor buy bitcoin at discount). In the absence of that \u2014 say, nobody buys the treasury company issuances, and financial capital flows somewhere else<\/em>; money printing stops; interest rates on (safer?) government securities shoot up, etc \u2014 I don\u2019t see how Strategy\u2019s mNAV doesn\u2019t just collapse back down to 1.\u00a0<\/p>\n

Lastly, there\u2019s a custodian risk for Strategy specifically. Being the biggest player around, with some 3%<\/a> of the total supply, honey-pot risks abound. (This probably won\u2019t be an issue for the smaller ones, distributed across very different jurisdictions.) Strategy keeps its gigantic pile of coins with Coinbase custody \u2014 in solutions that are purposefully kept pretty opaque<\/a>.\u00a0<\/p>\n

What happens to Strategy\u2019s business if Coinbase goes bankrupt? Or worse, new political winds bring in confiscation and\/or aggressive taxation metrics? These are good questions, but very<\/em> out-there tail risks nonetheless. Do we really have to worry that much <\/em>about them?<\/p>\n

Whether bitcoin treasury companies are here to bring bitcoin to the center of global capital markets, or whether this all ends in disaster, we have yet to see.\u00a0<\/p>\n

Closing Thoughts: Sell-Out? Ponzi Got to Your Head?<\/h2>\n

Have I intellectually sold out? Am I a corporate slave? Has David Bailey\u2019s musings<\/a> \u2014 and the fact that Nakamoto, loosely affiliated with Bitcoin Magazine via shared ownership and marketing services \u2014 rubbed off on me, now that NAKA is merging with KindlyMD<\/a> and can unleash its<\/em> flywheel\/\u201cPonzi\u201d scheming in full?<\/p>\n

First, it would be a deep betrayal<\/a> of journalistic integrity and \u2014 tells me our in-house legal counsel \u2014 illegal to use a media platform to pump securities owned by its owner. (Though in the age of Trump<\/a>, who can tell?). But I certainly wouldn\u2019t be<\/em> doing my job<\/em> if I weren\u2019t seriously investigating the pros and cons<\/a> of these entities mushrooming up everywhere.\u00a0<\/p>\n

Second, and as an illustration of my very <\/em>low conviction in all of this: I hold about as much in treasury company stocks as I do in custodial Lightning<\/a> wallets for zapping and convenience spending \u2014 ergo, not much<\/em>.\u00a0<\/p>\n

Third, for full transparency (again, on advice of counsel), here\u2019s the experience detailed to date (note: calculated at prices before<\/em> Treasury Secretary Scott Bessent<\/a>\u2019s comments yesterday<\/a> shoved all these prices downward):\u00a0<\/p>\n

A few things stand out.\u00a0<\/p>\n

Choose your bitcoin treasury companies carefully: H100<\/a> and Sander Andersen<\/a> seem pretty dedicated to the stacking effort, and the company keeps moving up the bitcoin treasuries list. For now, financial markets reward such companies for their efforts. In contrast, the K33 team moves much slower<\/a>, and their share price experience since their first bitcoin launch months ago has been classic, short-term pump before gradually declining back to where the stock started<\/a>. MARA and Strategy are hovering around where they have been for months.\u00a0<\/p>\n

My amazing ~5% excess return over bitcoin<\/em> is too meagre to bother with \u2014 and one-off lucky<\/em>. Over longer time periods, this might change\u2026 but honestly, just don\u2019t bother.<\/p>\n

I will probably get tired of this latest fiat financial engineering fad soon enough. It\u2019s only so much fun to hold permissioned, brokerage-limited, old school assets.\u00a0<\/p>\n

Come hell or high water, celebration or disaster, glory or tears\u2026 it seems much easier to just keep chopping wood and stacking sats into cold storage than to bother with any of these bitcoin securities.<\/strong>\u00a0<\/p>\n

Treasury fever is running high on Wall Street and among hyped-up Bitcoiners. Maybe the financialization of bitcoin is upon us\u2026 but honestly, I think I\u2019ll mostly just sit this one out.\u00a0<\/p>\n\n

\u2014<\/p>\n

BM <\/em>Big Reads<\/em><\/a> are weekly, in-depth articles on some current topic relevant to Bitcoin and Bitcoiners. Opinions expressed are those of the authors and do not necessarily reflect those of BTC Inc or Bitcoin Magazine. If you have a submission you think fits the model, feel free to reach out at editor[at]<\/em>bitcoinmagazine.com<\/em><\/a>.<\/em><\/p>\n

The opinions expressed in this article are the author\u2019s alone and do not necessarily reflect the opinions of BTC Inc, BTC Media, Bitcoin Magazine or its staff. The article is provided for informational purposes only and should not be considered financial, legal or professional advice. No material non-public information was used in writing this article. Opinions, and financial actions taken as a consequence of those opinions, are those of the author\u2019s and do not necessarily reflect BTC Inc, BTC Media, or Bitcoin Magazine.\u00a0<\/em><\/p>\n

Nakamoto has a marketing partnership with Bitcoin Magazine\u2019s parent company BTC Inc to help build the first global network of Bitcoin treasury companies, where BTC Inc provides certain marketing services to Nakamoto. More information on this can be found\u00a0<\/em>here.<\/em><\/a><\/p>\n

This post How to Think About Bitcoin Treasury Companies: A Bitcoiner\u2019s Dilemma in the Age of Rampant Speculation<\/a> first appeared on Bitcoin Magazine<\/a> and is written by Joakim Book<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

Bitcoin Magazine How to Think About Bitcoin Treasury Companies: A Bitcoiner\u2019s Dilemma in the Age of Rampant Speculation Strategy, Michael Saylor and MSTR have taken over Wall Street. To many people\u2019s chagrin, the suitcoiners and corporates are here: Bitcoin held by corporations in the form of bitcoin treasury companies is hypnotic to look at. It […]<\/p>\n","protected":false},"author":0,"featured_media":4587,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-4586","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-bitcoin"},"acf":[],"_links":{"self":[{"href":"https:\/\/digkrypton.com\/index.php\/wp-json\/wp\/v2\/posts\/4586","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/digkrypton.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/digkrypton.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/digkrypton.com\/index.php\/wp-json\/wp\/v2\/comments?post=4586"}],"version-history":[{"count":0,"href":"https:\/\/digkrypton.com\/index.php\/wp-json\/wp\/v2\/posts\/4586\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/digkrypton.com\/index.php\/wp-json\/wp\/v2\/media\/4587"}],"wp:attachment":[{"href":"https:\/\/digkrypton.com\/index.php\/wp-json\/wp\/v2\/media?parent=4586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/digkrypton.com\/index.php\/wp-json\/wp\/v2\/categories?post=4586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/digkrypton.com\/index.php\/wp-json\/wp\/v2\/tags?post=4586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}