The Bitcoin Treasury Conversation The Industry Actually Needs To Have
Two of the biggest names in bitcoin treasury investing took the stage at BTC Prague this week and walked through capital structure questions every shareholder should understand.
The most interesting conversation in bitcoin treasury investing happened on stage at BTC Prague this week. Jack Mallers, the CEO of Strike and Twenty One Capital, sat across from Michael Saylor, the executive chairman of Strategy, and asked two questions about how investors should evaluate a public company whose primary asset is bitcoin. The questions were direct. The answers were extended. The exchange has generated a lot of social media noise since, most of which has missed what actually matters.
The questions Mallers raised are the questions every shareholder of every public bitcoin company should be able to answer about their own holdings. The answers Saylor gave reflect genuine complexity in Strategy’s capital structure that has accumulated as the company has grown. The honest read on the exchange is that it surfaced concepts that have not been adequately translated for retail and institutional investors yet, and that the bitcoin treasury industry needs a clearer shared vocabulary to talk about per-share accretion, dilution, and valuation.
So let me walk through the concepts, because the concepts are what matter.
The first question was how to define multiple-on-net-asset-value, the metric the industry calls mNAV. mNAV is supposed to tell you whether a public bitcoin company is trading at a premium or a discount to the bitcoin it holds. The simple version is share price divided by bitcoin per share, with bitcoin valued at the current spot price. If the multiple is above one, the company trades at a premium. If it is below one, it trades at a discount.
The complicated version is that the denominator depends on how you count the company’s obligations. Strategy currently has six point seven billion dollars of convertible debt that is out of the money at the current one hundred fifteen dollar share price. That debt is not expected to convert into equity unless the stock rises significantly. If you include that debt as a liability that has to be backed out before calculating bitcoin per share, you get one mNAV. If you exclude it on the basis that the conversion is unlikely at current prices, you get a different mNAV. Both calculations are defensible. They are answering slightly different questions.
Saylor’s response captured this complexity. He said investors can calculate mNAV by including the notional value of convertible debt, common equity, and preferred equity. He also said mNAV is only one valuation framework among several, and that investors can look at gross assets per share and net assets per share as alternative measures, with different treatment of debt and preferred equity depending on which framework they pick. He added that the distinction matters less when debt and preferred equity are a small portion of the company’s overall asset base.
That is a reasonable answer in substance. Companies with complex capital structures genuinely do require multiple frameworks to be evaluated cleanly, and analysts at major investment banks use different approaches for different purposes. The piece of the answer that I think the industry has not absorbed yet is which of the frameworks shareholders should anchor on for which decisions. If you are trying to decide whether to buy MSTR at the current price, the mNAV framework that includes the convertible debt gives you the conservative answer. The framework that excludes it gives you the optimistic one. Both answers are useful for different purposes. Investors need to know which one applies to the question they are trying to answer.
The second question was sharper and more important. Mallers asked Saylor for an example of a dilutive transaction, given that Saylor has been arguing publicly that issuing equity for cash or bitcoin is not dilutive when the proceeds buy bitcoin at favorable prices.
This is the question that matters more, because the answer determines how shareholders should think about every future capital raise. Let me walk through the mechanics carefully.
When a public company issues new shares in exchange for cash, the existing shareholders own a smaller percentage of the company. That is dilution in the simple ownership sense. The question is whether the dilution is offset by what the company does with the cash. If the cash is deployed at a return greater than the cost of equity, the transaction is accretive on a per-share basis. The shareholders own a smaller percentage of a more valuable pie. If the cash is deployed at a return less than the cost of equity, the transaction is dilutive on a per-share basis. The shareholders own a smaller percentage of a pie that did not grow enough to offset the dilution.
This is where Saylor’s framework requires careful translation. His argument is that issuing equity for cash strengthens the balance sheet, expands the capital base, and improves creditworthiness. He pointed to Strategy’s recent addition of approximately one hundred million dollars to its USD reserves, taking the total to roughly one billion dollars, as an example of how new capital strengthens the company. That is true in a balance sheet sense. The company has more assets after the raise than before it. But balance sheet expansion is not the same as per-share accretion. A shareholder cares about whether their per-share claim on the company has grown, not whether the company’s total asset base has grown. Those are different metrics.
This is the exact tension that surfaced on X this week in a separate exchange between Saylor and bitcoin advocate Matthew Kratter. Kratter pointed out that Strategy’s own published metric, BTC Yield, which tracks bitcoin holdings per assumed diluted share, fell from thirteen point zero percent on June 1 to twelve point eight percent on June 8. Over that window, Strategy’s bitcoin holdings rose by 1,550 coins, but diluted shares outstanding rose from 382.756 million to 384.180 million. BTC Gain year to date also fell, from 87,754 to 86,328. By Strategy’s own metric, in other words, the most recent purchase was marginally dilutive on a bitcoin-per-share basis. Not catastrophic. Not breaking. But marginally negative, by the framework the company itself publishes.
Saylor’s argument in response is that BTC Yield is one of several valid frameworks and that the broader balance-sheet effect of the transaction was positive. Both statements are accurate. The point is that retail investors and institutional investors hearing the “not dilutive” framing need to understand that it depends on which framework you use, and that the company’s own preferred metric showed marginal dilution this week.
This is not a bear case on Strategy. The macro flow argument I laid out on Wednesday still holds. The doom narrative is still wrong on the structural facts. Strategy is the buyer in this market, not the seller, and the next institutional wave will not be driven away by a couple of basis points of per-share dilution on a single transaction. What it does change is how the conversation around bitcoin treasury investing needs to evolve. The industry has grown to the point where the public companies operating in it have capital structures that genuinely require sophisticated analysis. The frameworks for that analysis exist but have not been standardized. Different practitioners use different inputs. Different metrics produce different answers. None of this is hidden. All of it is public. But the synthesis has not been done.
Mallers and Saylor are not enemies in this conversation. They run companies pursuing related but distinct strategies. Twenty One Capital holds 43,514 bitcoin and is building bitcoin-native financial services on top of its treasury. Strategy holds 845,256 bitcoin and is focused on maximizing bitcoin per share through equity issuance and preferred stock structures. Both approaches are legitimate. Both require their own frameworks for evaluation. The exchange this week was the kind of substantive discussion the industry needs more of, and the questions Mallers raised are the questions every shareholder of every public bitcoin company should be ready to ask, and answer, about their own holdings.
What investors should take away is that complexity is not a red flag in itself, but it does require diligence. If you hold MSTR, you should understand how the convertible debt affects mNAV under each framework, and you should know which framework matters for your specific holding period and risk profile. If you hold XXI, the same standard applies to that company’s capital structure. If you hold any public bitcoin company, the same standard applies. The basic questions are these. How is bitcoin per share calculated. How is dilution measured. What metric does the company publish. What does that metric say about the most recent transactions. These questions have answers. The answers may require some work to find. The companies in this space are increasingly disclosing the inputs needed to do that work, and the BTC Prague conversation this week was a useful prompt for shareholders to do it.
I’ll see you Monday.
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