Listed companies are quickly transformed into Bitcoin Treasury vehicles, traveling capital to buy BTC and keep it on their balance. As Bitcoin is increasingly seen as a potentially global reserve asset that gets institutional traction and strong price expectations, this trend may seem sound. But there is a problem: Most of these companies have acquisition plans without a business plan.
Why buy for a prize when you can buy Bitcoin directly?
Almost any investor can buy Bitcoin directly, either the place or via ETFs. So why invest through a listed company dealing with a significant premium for the net value (NAV) of its Bitcoin?
The short answer is: You should not unless the company has a clear strategy to put its Bbitcoin to work in a way that investors cannot easily replicate. Keeping BTC should serve an operational purpose. Otherwise, the company should return the capital and allow shareholders to buy Bitcoin on their own terms.
Bitcoin yield ≠ Business model
To justify prizes, some analysts now use the concept Bitcoin yieldThe percentage increase in BTC per Stock over time. Although it is an interesting KPI to track, it does not justify a prize for NAV on your own.
Yes, if a company issues equity for a prize over NAV and buys more BTC, it can increase BTC per day. Stock. But if an investor’s goal is to get the maximum Bitcoin exposure per Dollars invested, investors should just buy BTC directly.
Geared long with limited upside
In order to accelerate their acquisitions, many treasury companies raise capital through different types of convertible debt. The result is a geared long position in bitcoin, with full exposure to downward downward and limited upside. This structure is exactly why creditors have been eager to sign such instruments.
If Bitcoin Falls, creditors will be repaid in USD, while the company may be forced to sell its BTC holdings to cover the debt. If Bitcoin rises, creditors convert their debt to shares to a discount and sell them to catch the opening over the conversion price. It is upwards that would otherwise belong to the shareholders.
As an investor who chooses between buying into a geared Bbitcoin Equity Company or simply taking on gearing against your own BTC, you should ask: Is the reduced upside worth avoiding the work of doing it yourself?
If the company also deals with a significant prize for its underlying bitcoin and lacks any operational plan in addition to buying and keeping BTC, the answer is probably no.
The same applies to other simple risk -taking strategies, such as lending BTC in exchange for interest; They introduce risk but do little to justify the prize.
A business plan, not just a BTC plan
This does not mean that all Bitcoin Treasury companies must shop on or under NAV. But a prize requires more than a financing and acquisition strategy, it requires a business strategy.
A strong Bitcoin balance can serve as a powerful foundation for an operational business. In funding, balances are the basis of lending, trade, structuring and more, and some of the current NBitcoin Treasury companies are likely to appear as future economic giants.
Brokerage, liquidity determination, security loans and structured products are all examples of operational models that can scale, generate revenue and justify Premium value.
In contrast, it is not a business plan. If a clean game that Treasury Company does not develop an operational plan, its prize will collapse and it can eventually be acquired by a company that Do Know how to put Bitcoin to work.
Bitcoin is the new obstacle rate. To beat BTC, companies need to do more than just buy and keep it. They need to find out how to build a Bitcoin-based business.
