This week, two of the largest crypto treasury companies, Strategy and BitMine, notably increased their digital asset holdings despite a decline in their market premiums. Strategy, previously known as MicroStrategy and focused on Bitcoin, reported acquiring 10,624 BTC last week for $962.7 million, marking its largest weekly purchase since July. This move came as Strategy's stock, MSTR, saw a 51% drop over the year, trading at $178.99. Similarly, BitMine, the largest corporate holder of Ethereum, expanded its holdings by 138,452 ETH. These acquisitions occur amid growing pressures on the Digital Asset Treasury (DAT) model, which has seen the gap closing on arbitrage opportunities that once allowed public companies to trade at 2.5 times their Net Asset Value (NAV) while issuing equity to fund acquisitions. Currently, Strategy's premium to NAV (mNAV) is approximately 1.15, and BitMine's is around 1.17, indicating the diminishing advantage of issuing stock at inflated valuations to buy assets below their intrinsic values. This "infinite money glitch" is faltering, highlighting vulnerabilities within the corporate-crypto landscape.
Strategy's latest acquisition increases its Bitcoin holdings to 660,624 BTC, over 3% of the total Bitcoin supply, valued at about $60 billion with $10 billion in unrealized gains. However, the funding model supporting this growth is under threat, as it relies heavily on issuing common stock. This approach is only beneficial when the company trades above its underlying asset value. For years, Strategy leveraged a cycle of issuing shares at a premium, buying Bitcoin at market prices, and increasing value per share, all driven by momentum. However, this reflexive cycle is now breaking down, as Bitcoin has fallen from its October high of $126,000 to a range of $90,000-$95,000. NYDIG data shows a correlation between DAT premiums and the asset's trend strength. When momentum fades, the market's appetite to pay a premium for corporate exposure diminishes, affecting Strategy and similar firms.
Strategy faces a mechanical risk: if its multiple falls below 1.0, stock issuance becomes dilutive. Management has acknowledged this risk, indicating that if mNAV drops below parity, they might consider selling Bitcoin. Such a move could trigger a feedback loop where equity weakness forces asset sales, reducing Bitcoin prices and further impacting Strategy's valuation. To address concerns about debt servicing in a low-premium environment, Strategy raised $1.44 billion to enhance liquidity. CEO Phong Le emphasized this as necessary to counter "FUD" and sustain operations through 2026. Despite these defensive measures, Executive Chairman Michael Saylor portrays the recent Bitcoin purchases as a demonstration of strength, a sentiment echoed by former White House official Anthony Scaramucci, who described the equity sales as smart for the balance sheet and the broader Bitcoin market. Nonetheless, the strategy's economic model faces narrowing margins with each new stock issuance.
While Strategy focuses on a store-of-value approach, BitMine is shifting towards a yield-bearing model akin to a sovereign wealth fund. The firm accelerated Ethereum acquisitions after an October market disruption, now holding 3.86 million ETH, aiming for a 5% market share. BitMine plans to generate network-native income through staking, with a validator rollout slated for 2026, projecting an annual yield of over 100,000 ETH at current rates. This approach differentiates BitMine's solvency model from Strategy's, which depends on asset appreciation and a persistent premium. In contrast, BitMine is building a model based on anticipated cash flows. Chairman Tom Lee connects this strategy to institutional adoption trends, citing Wall Street's interest in tokenizing financial products, which he estimates could reach a market size nearing a quadrillion dollars. Lee views stablecoins as a transformative moment for Ethereum, catalyzing institutional recognition of tokenized assets. However, this pivot comes with execution risks, as validator income won't materialize until 2026, and Ethereum has historically lagged behind Bitcoin during market downturns. Despite this, BitMine's aggressive buying is based on the belief that the industry's move towards tokenization and programmable money will sustain ETH demand despite current volatility. The company hopes that Ethereum's "Fusaka" upgrade and institutional interest will stabilize the market, contrasting with current equity market skepticism.
Both companies face a shared structural challenge: the commoditization of crypto access. The launch of spot ETFs in early 2024 temporarily boosted the DAT model's relevance, but capital flows have since reversed. Coinperps data shows US spot Bitcoin ETFs' assets under management fell from over $165 billion in October to as low as $118 billion before rebounding to $122 billion. Despite this, interest in such financial vehicles remains, as evidenced by Vanguard, a major brokerage platform, reversing its anti-crypto stance to allow third-party crypto ETFs. This has flattened the market structure and eliminated the distribution gap that previously justified DAT equity premiums. Capriole data indicates no new DAT formations in the past month and signs of treasury unwinds among smaller entities. This suggests the exit of "tourist class" corporate entrants, leaving only scaled incumbents with the liquidity to manage large treasury operations. As crypto access becomes commoditized, Strategy and BitMine must differentiate themselves through financial engineering rather than access. Investors can now buy Bitcoin and Ethereum at NAV via ETFs without paying a premium, expecting DATs to outperform through leverage, yield, or timing. The narrative of buying stock for crypto exposure is outdated.
These firms' buying activities reflect conviction but also highlight their structural challenges. Strategy, led by Michael Saylor, is upholding its issuance model mechanics, while BitMine focuses on its future yield timeline. Both firms operate in an environment where their expansion's essential fuel—premium—is shrinking each quarter. Their future hinges on three factors: a resurgence in crypto demand by 2026, the stabilization of NAV premiums above parity, and the realization of enterprise flows from tokenization.