Bitcoin treasury companies continue to struggle with a sharp slowdown in Bitcoin accumulation due to falling stock prices and a tight market, with many currently trading at less than 1x their net asset value (mNAV).
In other words, for these “pure” financial holders (i.e. excluding miners like MARA Holdings and broader crypto platforms like Bullish), their market capitalization is less than the value of their Bitcoin holdings.
Semler Scientific (SMLR) launched its Bitcoin treasury strategy in mid-2024 and has accumulated over 5,000 BTC. Despite this, the company’s stock is currently trading at about the same level as when the company began its Bitcoin efforts, around $24 per share, and the company’s mNAV is currently just 0.80x.
Semler is currently in the process of being acquired by Strive (ASST), a relatively new company, but the buyer faces its own challenges.
Since completing its SPAC merger just over a month ago, Strive’s stock price has fallen about 90%, leaving ASST’s valuation at about 50% of the value of the 5,885 Bitcoins on its balance sheet.
This is also true for KindlyMD (NAKA), another recently completed SPAC. KindlyMD (NAKA) is the 19th largest publicly traded Bitcoin holding company, holding 5,765 BTC and trading at just 0.50x mNAV. It has a market capitalization of approximately $300 million, and its Bitcoin holdings are worth approximately $631 million. The company has $250 million in convertible debt, which may explain some of the steep discount.
These are just a few notable examples, but the valuations of these pure Bitcoin finance companies are about the same across the board.
Other notable stocks are also trading below NAV, according to BitcoinQuant data: Capital B (ACPB) 0.75x (holds 2,818 BTC), The Smarter Web Company (SWC) 0.72x (holds 2,660 BTC), H100 Group (GS9) 0.88x (holds 1,046 BTC), Metaplanet (3350) 0.98x (holds 30,823BTC).
These same companies were trading at significant premiums during the summer bull market. Since then, investor sentiment has rapidly changed from optimism to caution and now utter despair.
This discount now raises important questions. Does the discount represent real value, or does the market reflect broader uncertainty about these companies’ balance sheets and execution?
What can finance companies do to recover premiums?
Sentiment needs to change, and that will require strengthening the Bitcoin market.
Although Bitcoin has risen since the beginning of this year, it is currently at roughly the same level as it was on January 20, the day of President Trump’s inauguration. One aspect was particularly frustrating for bulls. While stocks and precious metals continue to soar on an almost daily basis, Bitcoin has done little this year.
Although macroeconomic events are difficult to control, Bitcoin treasury companies can consider several strategies to mitigate the discount.
One option is to buy back its own shares, which can be raised by selling Bitcoin or issuing credits. However, the latter will largely depend on the company’s ability to secure favorable terms and generate sufficient revenue to repay the new debt.
An example of this is Empery Digital’s announcement of a $100 million credit facility to fund $150 million worth of stock buybacks. However, since the announcement, the stock has fallen 10%, taking the company to a 60% loss since the beginning of the year. Additionally, Sequans Communications (SQNS), which holds 3,234 BTC, recently announced an American Depositary Share (ADS) buyback program representing 10% of its outstanding shares and authorized the buyback of up to 1.57 million ADS. Since the announcement, the stock has fallen 27%.
Another approach is to leverage Bitcoin by deploying some of your holdings into low-yield trading and liquidity strategies to generate modest single-digit returns. This is similar to what MARA Holdings (MARA), a Bitcoin miner that also buys BTC on the open market, has started doing.
Strategy: Last Survivor
Michael Saylors Strategy (MSTR) stands alone among the top 20 pure-play publicly traded Bitcoin holders in that it currently trades at a premium to its own BTC stack.
Last I checked, the company’s mNAV was approximately 1.39x. However, this range is rapidly narrowing. In November 2024, Strategy stock hit an all-time high of $543, trading at nearly three times the value of its Bitcoin.
Almost a year later, MSTR stock has fallen to $285, thanks not only to a significant increase in Bitcoin on its balance sheet but also to a nearly 60% increase in BTC prices.
It is worth noting that mNAV below 1.0 does not necessarily mean a death sentence. Similar discounts occurred at Strategy Inc. during the 2022 economic downturn. Those who bought at the time were rewarded with extraordinary returns. Despite the recent share price decline, MSTR is up nearly 10x since then.
It remains to be seen whether new entrants currently grappling with similar challenges to those faced by MSTR in 2022 will also be able to recover.
