Bitcoin treasury companies explained: mNAV, convertibles and the Strategy playbook

In August 2020 a mid-sized business intelligence software company called MicroStrategy announced it had bought $250 million of bitcoin as a treasury reserve asset. Five years later, renamed Strategy, it held more than 600,000 bitcoin, was one of the most traded stocks in the United States, and had inspired dozens of imitators holding bitcoin, ether, solana and other tokens. The bitcoin treasury company is now a recognized category of listed equity, and understanding how it works is necessary to understand a meaningful slice of both crypto demand and equity market volatility.

The basic model

The company holds bitcoin on its balance sheet and raises capital to buy more. Three funding channels do most of the work. At-the-market equity programs let the company sell new shares into the market continuously through a broker. Convertible senior notes raise debt at very low or zero coupons because investors value the option to convert into a stock with bitcoin-like volatility. And, since 2025, perpetual preferred stock with a fixed dividend, sold to income investors, has become the fastest-growing channel for Strategy and its followers. The proceeds buy bitcoin, the bitcoin count per share rises if the raise was done at a premium, and the cycle repeats.

That premium is the engine. Investors define mNAV as the company’s enterprise value divided by the market value of its bitcoin. When mNAV is above one, the company can sell a dollar of stock and buy more than a dollar’s worth of bitcoin per share for existing holders, which the industry calls accretive dilution and measures as “BTC yield,” the percentage growth in bitcoin per share. When mNAV falls to or below one, the trade stops working and the company is simply a leveraged bitcoin holder with corporate overhead.

Why investors pay the premium

The honest answer is a combination of factors, not all of which survive scrutiny. Some investors are restricted from holding bitcoin or ETFs directly but can hold operating company stock. Some want leverage without margin: the company’s debt is non-recourse to the shareholder, so the equity behaves like a call option on bitcoin. Some are betting on the management’s ability to keep raising capital accretively, effectively paying for the financial engineering. And a large part of the trading volume comes from convertible arbitrage funds and options traders who want the volatility itself. Strategy’s inclusion in the Nasdaq 100 in December 2024 added index demand. The premium has swung between well over two times and close to one, and the swings are what generate the headlines.

The risks

Leverage is the obvious one. Convertible notes have to be refinanced or repaid; if bitcoin falls far enough for long enough, a company that cannot raise equity at a premium has to sell bitcoin, fund coupons from a shrinking business or restructure. Strategy’s debt has been modest relative to its holdings, but smaller imitators with thinner balance sheets, less liquid stocks and no operating business are far more exposed, and 2025 and 2026 saw a wave of newly announced treasury companies whose mNAV collapsed below one within months.

Accounting is the second. Under the old intangible-asset rules, bitcoin could only be written down, never up, which produced misleading losses. FASB’s ASU 2023-08 requires fair value measurement from fiscal years beginning after December 15, 2024, so holdings are marked to market each quarter and the changes hit net income. That makes reported earnings enormously volatile and, for the largest holders, creates exposure to the US corporate alternative minimum tax on unrealized gains, an issue the industry has lobbied on.

Concentration is the third. A small number of companies hold a large and growing share of bitcoin supply. Their buying supported the price in 2024 and 2025; a forced seller of that size would do the reverse. Analysts track corporate holdings for the same reason they track ETF flows.

The imitators

Japan’s Metaplanet, Semler Scientific, and a long list of 2025 entrants adopted the Strategy playbook for bitcoin. Others applied it to different assets: SharpLink Gaming and BitMine to ether, Upexi and DeFi Development Corp to solana, with the added twist that proof-of-stake tokens can be staked for yield inside the company. The pattern was usually the same: a small listed company, a private placement led by crypto funds, a pivot announcement, and a stock that spiked on the news. How many survive a full cycle is the open question, and the market has begun to distinguish between companies with a durable capital-raising franchise and those that simply bought a token at the top.

What to look at

For anyone analysing one of these companies the checklist is short. Bitcoin (or token) per share and its growth rate. mNAV, and whether recent raises were done above it. Debt maturity schedule and the coupon burden relative to any operating cash flow. The size and terms of preferred stock, which sits ahead of common equity. Custody arrangements for the holdings. And the liquidity of the stock itself, because the whole model depends on being able to sell shares in size. The treasury company is a financial product wearing an operating company’s clothes, and it should be underwritten as one.