Bitcoin Treasuries: Infinite Money Glitch or Leverage-Fueled Mirage?
Bitcoin has notched fresh all-time highs in 2025, coinciding with friendlier policy signals under the Trump administration. Against that backdrop, a new corporate archetype has surged: the “Bitcoin Treasury”—public companies that hold Bitcoin directly on their balance sheet and use equity and hybrid securities to buy more. The poster child is MicroStrategy—now colloquially referred to as “Strategy” in the discussion—whose stock (MSTR) has soared as the firm repeatedly raised capital at a premium to the value of its Bitcoin holdings. This post analyzes what’s driving the premium, how the financing loop works, and where the risk lines are drawn, using only the details explicitly disclosed in the script. Timeframe: 2020–2025. Currency: USD.
Quick Summary
- Public companies owning Bitcoin have jumped to 166, more than triple last year’s count.
- Collectively, they hold roughly 5% of all outstanding Bitcoin.
- MSTR is up roughly +2,600% over 5 years—nearly 3x Bitcoin’s return over the same period.
- MSTR’s premium to its Bitcoin per share (MNAV) historically sat around 2–3x; more recently ~1.5x.
- Strategy holds about $75B of Bitcoin; its software revenue is <$500M annually and at an operating loss.
- Capital raised since 2020: ~$30B common equity, $9B convertible notes, $3B preferred shares.
- Diluted share count has roughly tripled since 2020.
- For the third straight quarter, corporates bought more Bitcoin than Bitcoin ETFs (no amounts disclosed).
- MSTR’s “Bitcoin yield” presented for 2024: 74% (term and framing are contested in the script).
- MSTR’s current ratio is <1x; stock fell about -20% over the past month while Bitcoin was roughly flat.
Sentiment and Themes
Overall tone: Negative 60% | Neutral 30% | Positive 10%
Top 5 Themes
- Premium-to-NAV dynamics and “infinite money glitch” loop
- Leverage via convertibles and preferreds to accumulate Bitcoin
- Rapid diffusion of the “Bitcoin Treasury” model across public markets
- Dilution, liquidity, and rollover risks if premiums compress or prices stall
- Investor enthusiasm versus fundamentals in capital markets access
Detailed Breakdown
What is a “Bitcoin Treasury” and why now?
Companies like Tesla, Block, and GameStop have disclosed Bitcoin buys, but the pace has accelerated in 2025. There are now 166 public firms with Bitcoin on balance sheet, owning about 5% of supply. For three consecutive quarters, this cohort has collectively outbought spot Bitcoin ETFs. The narrative: corporate balance sheets are a new on-ramp for institutional adoption.
The Strategy playbook: premium, raise, rinse, repeat
Strategy’s stock has often traded at a premium multiple of net asset value (MNAV) versus its Bitcoin-per-share—historically 2–3x, lately closer to 1.5x. That premium has enabled the firm to issue equity and hybrid securities, buy more Bitcoin, see its asset base rise, and then raise again—tripling its diluted share count since 2020. The result: a roughly 2,600% stock return in five years, far outpacing Bitcoin itself.
Why pay $2 for $1 of Bitcoin?
Critics ask why investors buy MSTR above underlying Bitcoin value. Bulls cite regulatory access where direct leverage is harder, confidence in management, and expectations of a persistently elevated or expanding premium. Management has also referenced credit amplification, options activity, passive flows, and institutional access as supportive factors.
Leverage architecture: convertibles in the spotlight
The company issued ~$9B of convertible notes, often at low—at times 0%—coupons because lenders valued the upside option to convert in a highly volatile stock (beta >3). If shares soar, noteholders can convert; if not, they get principal (and any coupon) back. This lowers cash interest burden and has funded more Bitcoin purchases.
Preferreds: cushioning versus hard defaults
Preferred shares (~$3B) function closer to debt with dividends, though only one of four classes is convertible. Skipping dividends doesn’t constitute a default, offering flexibility amid Bitcoin volatility. Still, skipped payments have consequences: securities could reprice sharply and future capital raises could become costly or constrained.
The debated “Bitcoin yield”
Management has touted a 74% Bitcoin yield for 2024—framed as increasing Bitcoin per share. The script challenges this, noting liabilities must be netted and that added Bitcoin is effectively funded by new investors accepting higher conversion premiums and valuations. If fresh capital slows or premiums compress, the mechanism weakens.
Copycats, SPACs, and token treasuries
Others are adopting the model, from balance-sheet allocations to full-on pivots into Bitcoin-only entities. The behavior rhymes with prior hype cycles (dot-com renamings circa 2000, blockchain rebrands circa 2017). The concept is spreading beyond Bitcoin: Ethereum treasuries, and even a public raise targeting $1.5B for a proprietary token (World Liberty Financial), are cited.
Competition for capital and shrinking premiums
As more treasuries crowd in, investor funds fragment. To attract capital, firms may offer richer terms or raise at lower premiums—diluting existing holders. Strategy itself has seen MNAV compression to roughly 1.5x and has guided that it won’t issue below 2.5x MNAV except to cover interest or dividends, effectively prioritizing legacy obligations over growth at lower multiples.
Correlation, liquidity, and rollover risks
MSTR’s correlation to Bitcoin is positive but variable, typically 0.5–0.8 on a monthly basis. Hybrid financing dampens margin-call risk, but not liquidity risk: dividends and maturities still need funding. If stock prices dip and conversion thresholds aren’t met, noteholders could seek cash, forcing Bitcoin sales and potentially pressuring Bitcoin prices—an inversion of the “infinite money glitch.”
Why it matters for investors
The model can magnify upside in buoyant markets and has done so. But it also concentrates risks: premium reliance, issuance dependence, and timing of conversions and payouts. With Strategy’s current ratio below 1x and a 20% one-month stock drawdown despite flat Bitcoin, the sensitivity to market conditions is on display.
Analysis & Insights
Growth & Mix
Growth has been balance-sheet driven: issuing equity and hybrids to buy more Bitcoin. Mix shift favors Bitcoin exposure over core software, which has <$500M revenue and negative operating income. Implication: valuation is tethered more to MNAV dynamics and issuance conditions than to software fundamentals.
Profitability & Efficiency
Operating losses in software and low/zero coupon convertibles reduce near-term cash strain, but value creation hinges on Bitcoin appreciation exceeding the blended cost of capital implicit in convertibles and preferreds. Unit economics for software are not disclosed beyond losses.
Cash, Liquidity & Risk
Hybrid funding lowers default risk versus straight debt but doesn’t eliminate liquidity needs for dividends and potential redemptions. Guidance to avoid issuing below 2.5x MNAV (except to service obligations) highlights reliance on premium maintenance. The script cites current ratio <1x and leverage exposure equivalent to roughly 17.2% of Bitcoin value via convertibles and preferreds.
| Metric | Disclosed Value | Notes |
|---|---|---|
| Bitcoin holdings (Strategy) | $75B | Primary asset base driving valuation |
| Software revenue | <$500M | Operating loss at the segment level |
| Equity issued since 2020 | ~$30B | Used to accumulate Bitcoin |
| Convertible notes outstanding | ~$9B | Low/0% coupons due to conversion optionality |
| Preferred shares issued | ~$3B | One of four classes convertible |
| Leverage vs. BTC value | ~17.2% | Convertibles + preferred vs. Bitcoin value |
| MNAV premium (historical) | ~2–3x | More recently ~1.5x |
| “Bitcoin yield” (2024) | 74% | Definition and netting of liabilities are disputed |
Notable Quotes
- “It has been referred to as an infinite money glitch.”
- “People that use fiat currency as a store of value. There’s a name for them. We call them poor.”
- “Companies recognizing that they can buy $1 of Bitcoin and effectively sell it for $2 if they do so as a publicly traded treasury company.”
- “[Strategy] won’t issue more shares below a 2.5x MNAV except to pay off interest or dividends.”
Conclusion & Key Takeaways
- Premium dependence is the fulcrum. If MNAV stays elevated
MNAV elevated above BTC-per-share, equity/hybrid issuance can compound holdings; if it compresses toward 1.0x, the loop stalls and dilution rises without BTC accretion. - Liquidity and rollover calendar outrank volatility. Watch preferred dividend declarations, convert conversion windows, and any cash-settlement features—these can force actions regardless of Bitcoin price.
- Issuance discipline is a near-term catalyst. A stated 2.5x MNAV floor implies fewer opportunistic raises at ~1.5x; a premium rebound, policy tailwinds, or passive inflows could reopen the playbook.
- Consider purer exposures. For BTC beta, spot Bitcoin or ETFs avoid premium/rollover risk; for convexity, remember you are underwriting capital-market access, not just Bitcoin direction.
- Stress-test the downside. A flat-to-down BTC tape plus premium compression can curtail raises, force cash servicing from the balance sheet, and potentially lead to BTC sales—tightening liquidity across the complex.