Treasury Companies Struggle to Match Bitcoin's Upsurge Amid Financial Risks
The concept of Bitcoin treasury firms has gained traction in recent years, with 179 listed companies holding Bitcoin on their balance sheets. These companies raise capital on traditional markets, buy Bitcoin, and aim to increase the amount of BTC that backs each share faster than the company dilutes shareholders.
According to Mark Palmer, managing director and senior equity research analyst at StoneX, this approach is based on a simple formula: Raise capital, buy Bitcoin, and increase the amount of BTC per share. However, he notes that when the price of Bitcoin is going up, investor enthusiasm waxes, but when it declines, financing gets harder, debt and yield obligations remain, and the same structure magnifies losses.
The 50 largest Bitcoin treasury companies bled $83 billion in market value since July 2025. Metaplanet's recent shareholder backlash shows the challenges faced by these firms when diluting shareholders too much. Palmer warns that issuing shares at a premium to net asset value and buying Bitcoin with the proceeds increases the BTC backing every existing share, while issuing shares at a discount destroys value.
Investors should look beyond the headline number of Bitcoin held by a company and focus on 'Bitcoin per fully diluted share, net of debt and preferred stock claims.'