Has the PIPE model failed for bitcoin tax companies? The collapse in the share prices of two notable recently completed deals – KindlyMD (NAKA) and Strive (ASST) suggests as much.
A PIPE, or Private Investment in Public Equity, is a financing mechanism where institutional investors buy shares directly from a listed company at a predetermined price, typically below market value, enabling the company to raise capital at a much faster pace without the lengthy and costly process of a traditional public offering.
PIPE transactions are often used by companies undergoing reverse mergers or going public via special-purpose acquisition company (SPAC), and have recently become a preferred financing strategy among bitcoin treasury companies looking to rapidly expand their bitcoin holdings.
Despite their best efforts, recent examples suggest that the PIPE model is not only struggling to deliver shareholder value, but is also burning through investor capital at a rapid pace.
This feature is part of CoinDesk’s Bitcoin Treasuries Theme Week, sponsored by Genius Group.
A case study for PIPE
The company that embraced a PIPE was healthcare company KindlyMD ( NAKA ), which completed a reverse merger in May 2025, resulting in bitcoin tax firm Nakomoto becoming a wholly-owned subsidiary and well-known bitcoin attorney David Bailey becoming CEO. Crucial to this transaction was a PIPE financing agreement that raised $563 million in gross proceeds to primarily fund bitcoin purchases.
In addition, the company issued a $200 million senior secured convertible note to Yorkville Advisors, which was later closed and replaced with another note. This took the total funding for NAKA to $763 million.
The terms of the PIPE were as follows: The initial round raised $510 million at $1.12 per share in May, followed by another $51.5 million at $5 per share in June.
These funds were deployed to accumulate bitcoin, with NAKA buying 21 BTC for $2.3 million in July and another 5,743 BTC for $679 million in August.
Despite the rapid accumulation of bitcoin, the company’s market performance has not followed suit.
Since the reverse merger back in May, NAKA’s stock has fallen more than 95% from highs of $30 to the current $0.80. Its market net asset value (mNAV) has also fallen below 1, indicating that the market now values the company at less than the value of its underlying bitcoin and assets.
The other company to adopt a PIPE strategy was Strive (ASST), founded by Vivek Ramaswamy, which merged with Asset Entities through a SPAC deal announced in May and closed in September.
Strive raised $750 million in gross proceeds through a PIPE priced at $1.35 per share, representing a 121% premium to ASST’s pre-merger share price.
The proceeds funded the purchase of 5,885 BTC and the structure was completely debt free. In addition to the PIPE, Strive announced a $450 million IPO and a $500 million stock buyback plan to combat dilution.
The company also entered into an all-stock deal to acquire another bitcoin tax company that trades at a discount to the value of its stake — Semler Scientific and its 5,048 bitcoin.
If approved, the pending acquisition of Semler Scientific will increase Strive’s bitcoin holdings to 11,700 BTC. Despite these moves, ASST’s stock performance has mirrored NAKA’s, plunging more than 90% from its May high of as high as $12 and now trading around $1 a share. stock. Similar to NAKA, ASST’s mNAV is just below 1.
Caution is the word going forward
The lackluster performance of NAKA and ASST calls into question at least two other bitcoin treasury SPAC/PIPE deals that have yet to close.
One of them is the merger between Twenty One Capital (XXI) – led by Jack Mallers – and Cantor Equity Partners (CEP). The firm announced its PIPE transaction back in April, becoming the third largest bitcoin tax company with holdings of 43,514 BTC. Like the earlier PIPE-driven deals, the initial post-merger enthusiasm sent CEP’s share price up from $10 to $60, but shares have now pulled back to around $20.
In addition, Bitcoin Standard Treasury Company (BSTR), led by Adam Back, plans to go public through a SPAC merger with another Cantor vehicle (CEPO) and aims to raise a total of $3.5 billion with up to $1.5 billion via a PIPE expected to launch in Q4.
CEPO shares peaked at $16 in the initial excitement following the announcement and have since retreated to the $10.50 range.
In short, what these deals show is that while PIPEs are a way to accelerate funding for bitcoin tax companies, they are also a potentially risky investment that warrants caution.
