As Bitcoin cash companies continue to struggle with falling stock prices and rapidly slowing Bitcoin accumulation in a tightening market, many are now trading below a multiple of 1 to their net asset value (mNAV).
In other words, for these “pure play” cash holders (i.e. excluding miners like MARA Holdings and broader crypto platforms like Bullish), their market capitalization has fallen below the value of their bitcoin holdings.
Semler Scientific (SMLR) launched its Bitcoin cash strategy in mid-2024 and has accumulated over 5,000 BTC. Despite this, its stock price now trades at roughly the same level as it did at the start of the company’s Bitcoin journey, around $24 per share, which now gives the company an mNAV of just 0.80x.
While Semler is currently being acquired by newcomer Strive (ASST), the buyer also faces its own challenges.
A roughly 90% drop in Strive’s stock price since the SPAC merger was finalized just over a month ago has left ASST’s valuation at only about 50% of the value of the 5,885 bitcoins on its balance sheet.
This is also the case for another recently completed SPAC, KindlyMD (NAKA), the 19th largest publicly traded bitcoin holding company, which holds 5,765 BTC and trades at just 0.50x mNAV – a market cap of around $300 million and bitcoin holdings worth around $631 million. The company has $250 million of convertible debt outstanding, which could partly explain the significant discount.
While these are just a few notable examples, the valuations are largely the same across the board for these pure-Bitcoin cash companies.
Other notable names are also trading below their NAV, according to BitcoinQuant data: Capital B (ACPB) at 0.75x (holding 2,818 BTC), The Smarter Web Company (SWC) at 0.72x (holding 2,660 BTC), H100 Group (GS9) at 0.88x (holding 1,046 BTC) and Metaplanet (3350) at 0.98x (holding 1,046 BTC). 30,823 BTC).
These same companies were trading at significant premiums during the summer bull market. Since then, investor sentiment has shifted from optimism to caution to the current utter despair.
The discounts now raise an important question: Do they represent real value, or does the market reflect broader uncertainty about these companies’ balance sheets and execution?
What can treasury companies do to get back to premium?
Sentiment needs to change, and that will likely require a stronger Bitcoin market.
Bitcoin – although higher for the year – is now at roughly the same level as it was on January 20, the day of President Trump’s inauguration. One aspect has been particularly frustrating for bulls: Bitcoin has done little this year while stocks and precious metals have continued to soar almost daily.
Although it is difficult to control macroeconomic events, Bitcoin treasury companies can consider several strategies to mitigate the discount.
One option is to buy back their shares, which can be financed either by selling bitcoin or issuing credit. However, the latter depends heavily on the company’s ability to obtain favorable terms and generate sufficient revenue to service the new debt.
One example is Empery Digital, which announced a $100 million credit facility to fund stock repurchases worth $150 million. However, since that announcement, the stock has fallen 10%, leading to year-to-date losses of 60%. Additionally, Sequans Communications (SQNS), which holds 3,234 BTC, recently announced an American Depositary Share (ADS) repurchase program representing 10% of its outstanding shares, authorizing the repurchase of up to 1.57 million ADSs. It is also down 27% since this announcement.
Another approach is to use their bitcoin by deploying a portion of their holdings into low-yielding trading or liquidity strategies that generate modest single-digit returns. This is similar to what a Bitcoin miner that also buys BTC on the open market, MARA Holdings (MARA), has started doing.
Strategy: last one standing
Among the 20 largest public bitcoin holding companies, Michael Saylor’s Strategy (MSTR) is now the only one trading at a premium to its BTC stack.
At last check, the company’s mNAV was around 1.39x. However, this figure quickly declined. At Strategy’s stock price of $543 in November 2024, it was trading at nearly triple the value of its bitcoin.
Now, about a year later and with not only a lot more bitcoin on its balance sheet, but also a roughly 60% rise in the price of BTC, MSTR shares have fallen to $285.
It should be noted that an mNAV below 1.0 is not necessarily a death sentence. Even Strategy experienced a similar downgrade during the economic downturn of 2022. Those who bought at the time were rewarded with exceptional returns: MSTR has since been nearly 10 times higher, even with the recent decline in stock prices.
It remains to be seen whether new entrants, now facing similar challenges to those MSTR faced in 2022, will also be able to stage a recovery.
