Public companies are rapidly transforming into Bitcoin Treasury cars, raising capital to buy BTC and keep it on the balance sheet. This trend seems sound as Bitcoin is increasingly seen as a potential global reserve asset, gaining institutional appeal and strong price expectations. But there is a problem: most of these companies have no business plans.
Why buy at a premium when you can buy Bitcoin directly?
Almost all investors can buy Bitcoin directly, whether on-site or through ETFs. So, why invest through listed company transactions with NAV (NAV) Bitcoin?
The short answer is: You shouldn’t unless the company has a clear strategy to place its BBITCOIN on ways investors can’t easily replicate. Holding BTC must achieve operational purposes. Otherwise, the company should return the capital and let the shareholders purchase Bitcoin on their own terms.
Bitcoin production ≠ business model
To justify premiums, some analysts now use Bitcoin productionOver time, the percentage of BTC per share of BTC increased. While this is an interesting KPI, it doesn’t justify the quality on its own.
Yes, if the company buys more equity in BTC at premiums above NAV, it can increase BTC per share. However, if the investor’s goal is to get the maximum Bitcoin risk per dollar invested, the investor should buy BTC directly.
Take advantage of the limited upward space in the long term
To speed up acquisitions, many Treasury ministries raise funds through a variety of convertible debts. The result is that in Bitcoin, the leverage ratio is very long, with full downside exposure and limited upside space. This structure is exactly why creditors are eager to underwrite such instruments.
If Bitcoin falls, creditors will repay the dollar, and the company may be forced to sell its BTC holdings to repay the debt. If Bitcoin goes up, creditors convert their debt into stock at a discounted price and sell it to capture the upside above the conversion price. This is not a shareholder’s benefit.
As an investor who chooses to buy leveraged equity firms or just leverage their own BTC, you must ask: Is the reduced upside worth avoiding the work you do?
If the company also trades at a high premium for its base Bitcoin and lacks any operational plans besides buying and holding BTC, the answer may be no.
The same applies to other simple risk-taking strategies, such as lending BTC in exchange for interest; they introduce risks, but have little reason to pay for premiums.
Business plans, not just BTC plans
This does not mean that all Bitcoin Treasury companies should trade on NAV or below. However, premiums require not only capital and acquisition strategies, but also business strategies.
A strong Bitcoin balance sheet can be a strong foundation for operating a business. In terms of finance, the balance sheet is the basis of loans, transactions, structure and more, and the current Nbitcoin Treasury company may become a future financial giant.
Brokerage, liquidity provision, mortgages and structured products are all examples of operational models that can scale, generate revenue and justify advanced valuations.
In contrast, simply raising funds to chase “bitcoin production” is not a business plan. If a pure gaming finance company does not have an operational plan, its premium will collapse and may eventually be acquired by a company Do Know how to make Bitcoin work.
Bitcoin is the new obstacle rate. To beat BTC, companies not only have to buy and hold it. They have to figure out how to build a Bitcoin-based business.
