So you’ve decided to start a bitcoin treasury. And why not? Everyone else seems to be doing it. This year dozens of companies have announced they plan to buy and hold the digital token. The strategy seems to works magic for some, yet not for others. Perhaps counter-intuitively, the losers might be the more appealing investment.
Strategy, née MicroStrategy, seems to be one of the winners. It holds $69bn of bitcoin, and is valued by the market at $110bn including debt. That makes issuing new stock, as the company is doing, a great idea for existing investors because it brings in more money, and hence more new bitcoin, than the dilution from the capital raise.
As an example, an investor who bought one share in Strategy at the beginning of 2024 got $51 of bitcoin for about $68. Their share now has a claim on $200 of the token. As the company issues more stock, or equity-like paper, the cycle continues. If its premium over net asset value shrinks, though, as it has lately, the game of musical chairs loses its efficacy.