Corporate America's crypto experiment is facing a reality check. After years of investors paying ~US$2.80 for every $1 of cryptocurrency sitting in corporate treasuries, people are beginning to ask themselves - why not just buy it directly?
Treasury company stocks are falling toward the value of their underlying holdings - and so too did a metric called mNAV (market multiple of Net Asset Value) across both Bitcoin and Ethereum treasury companies in July-August.
Bitcoin Treasury Companies:
- Strategy (MSTR): down 16%
- Metaplanet (MTPLF): down 62%
- Semler Scientific (SMLR): down 12%
Ethereum Treasury Companies:
- SharpLink Gaming (SBET): down 14%
- BitMine Immersion Technologies (BMNR): down 7%
When that multiple hits 1.0, the investment thesis collapses.
Upexi, a Solana treasury company, already trades below parity - meaning investors can buy the stock for less than the crypto it holds.
SharpLink has dropped 14% and BitMine fell 7% as both companies issue equity to fund crypto purchases.
The business model involves buying cryptocurrency with shareholder capital while charging management fees.
Dilution mechanism
The treasury company process works by convincing investors to pay premiums for stock, then issuing more shares to buy cryptocurrency.
BMNR raised US$250 million through private investment, causing its stock to soar 1,300% and until Wall Street's latest market dump, was trading17.23x its book value.
And SharpLink raised US$425 million and added 58.7 million shares to its existing count of 659,680 - an increase of 8,893% - the stock tanking when those shares hit the market back in June.
Over the past month, mNAVs have compressed across the board, with the sector averages peaking at 4.3 times before declining.
Companies issue new shares faster than they accumulate cryptocurrency, diluting existing shareholders.
Strategy (formerly MicroStrategy) and SBET's underperformance highlight the gap between stock performance and underlying crypto holdings.
DAT financing depends heavily on BTC volatility, which fuels convertible debt and equity issuance - with volatility muted, issuance capacity and mNAV growth may remain under pressure," VanEck Senior Investment Analyst Patrick Bush said.
When Bitcoin volatility falls, these companies struggle to raise capital, and premiums compress.
Parity threshold
An mNAV of 1.0 creates what analysts call a “death spiral" - and at that point, investors face corporate governance risk, management fees and dilution without justification; versus direct Bitcoin ownership through ETFs.
"It's a meme effect that has nothing to do with investment prowess or good corporate strategy," Stanford finance professor Darrell Duffie told Fortune.
Companies can boost share prices by announcing Bitcoin purchases regardless of business fundamentals.
Unlike internet companies that created productivity gains, treasury companies offer cryptocurrency exposure with corporate overhead.
When SBET's shares became tradeable after its PIPE funding, the stock declined as supply increased - a pattern repeating across the sector.
Ethereum's difference
Yield generation represents the main factor that might sustain mNAV premiums above 1.0.
Ethereum treasury companies have an advantage over Bitcoin counterparts through staking.
SBET has staked portions of its ETH holdings, generating 322 ETH from staking as of July 8, creating value beyond price appreciation.
ETH treasuries command higher mNAV premiums because staking generates 3.2-14% yields, providing mathematical justification for corporate overhead.
Staking allows Ethereum companies to increase cryptocurrency per share without issuing dilutive equity.
This advantage may diminish as ETH staking becomes available through direct protocols.
The numbers…
Public BTC treasuries collectively hold 951,000 BTC, with Strategy trading at 1.63 times the value of its Bitcoin holdings, and the MSTR/IBIT ratio has fallen to 5.43 - both down from earlier this year.
Among ETH strategic reserve companies, SBET and BTCS trade within the range of 2-2.5 times mNAV. while BMNR and BTBT tend to trade at higher multiples.
Spot Bitcoin ETFs provide institutional exposure without corporate overhead - different to institutional custody like Blackrock's ETHA, which offers direct cryptocurrency ownership without dilution.
Survival factors
Venture capital firm Breed warns that only companies maintaining strong mNAV premiums whilst growing Bitcoin-per-share can survive. Others may face acquisition, collapse, or trading below net asset value.
Those maintaining 1.5 times multiples face what VanEck warns could be "further mNAV compression" if "a prolonged low-volatility regime limits capital-raising ability".
And low Bitcoin volatility restricts their ability to raise capital through convertible debt or equity.
That's because this treasury company model requires premium valuations to function - without them, the mathematics favour direct cryptocurrency ownership.
As mNAV premiums compress toward parity, only operators with competitive advantages beyond simple cryptocurrency accumulation will justify their existence.
