Bitcoin Treasury Firms' Premium-Funded Model Under Fire from Twenty One Capital CEO

Twenty One Capital's new CEO Raphael Zagury is shifting focus away from the premium-funded model that has become synonymous with Bitcoin treasury firms. The strategy, which involves issuing shares above a company's net asset value to buy more BTC, cannot provide easy returns forever, Zagury warns.

Instead, Twenty One plans to build cash-generating businesses around its Bitcoin balance sheet, with mining being one example of how this can be achieved. Zagury compared the potential cash generation of mining to Berkshire Hathaway's use of insurance as a source of funds for reinvestment in other assets.

The company has outlined an operating-company model since May and is now prioritizing building operating businesses, expanding capital-markets capabilities, developing Bitcoin-backed financial products, and creating a Bitcoin-native lending platform. Any prospective acquisitions must be accretive when measured against Bitcoin.