Does the Bitcoin treasury company have a business plan? - At this rate, the "high stock price" will collapse | CoinDesk JAPAN

Thor Bjorn Bull Jensen of the cryptocurrency research firm K33 stated that simply buying and holding Bitcoin for Bitcoin yield is not a sustainable business plan.

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Public companies are rapidly transforming into "Bitcoin treasury companies" by raising funds to purchase Bitcoin (BTC) and recording it on their balance sheets. This suggests the potential for Bitcoin to become a global reserve asset, attracting the attention of institutional investors and increasing expectations for price rises, making this move seem healthy. However, there is a problem. Many of these companies have "purchase plans" but do not have "business plans."

Why buy shares of Bitcoin Treasury companies at a premium instead of Bitcoin?

Almost all investors can purchase Bitcoin through spot trading or ETFs (Exchange Traded Funds). Then, is there a reason to invest in stocks of publicly traded companies that are trading at a premium price significantly above the net asset value (NAV) of the Bitcoin they hold?

In short, the answer is "no." Unless you are creating added value that cannot be easily replicated using Bitcoin, you should not invest. A company's Bitcoin holdings must have a business purpose. Otherwise, the company should return the capital to the investors, and the investors should purchase Bitcoin at their own discretion.

"Bitcoin Yield" is not a business model.

To justify the premium (high stock price), some analysts use a metric called "Bitcoin Yield (the growth rate of Bitcoin holdings per share)." It is an interesting KPI, but it cannot justify the premium over NAV by itself.

Indeed, if a company issues shares at a price above NAV and uses the funds to purchase Bitcoin, the Bitcoin holdings per share will increase. However, if investors aim to "maximize their Bitcoin investment per dollar," it is more rational for them to purchase Bitcoin directly.

Limited Upside Potential for Leveraged Longs

Many treasury companies are raising capital through various types of convertible bonds to accelerate their acquisition of Bitcoin. As a result, leveraged long positions in Bitcoin are formed. This means that while they fully bear the downside risk, the upside potential is limited. This is precisely why creditors are willing to take on such financial products.

If Bitcoin falls, creditors may receive repayment in dollars, and companies may be forced to sell their holdings of Bitcoin to repay their debts. On the other hand, if Bitcoin rises, creditors may convert their debts into equity at a discounted price and then sell it for a profit. This profit would originally belong to the shareholders.

Investing in leveraged Bitcoin companies or leveraging your own Bitcoin. Investors must ask themselves, "Is the limited upside worth the effort of doing it myself?"

Companies are trading at a premium that significantly exceeds the net asset value of the Bitcoin they hold, and if they do not have a strategy beyond "buying and holding Bitcoin," the answer is almost "NO."

Similarly, a simple risk-taking strategy such as lending out Bitcoin to earn interest involves taking risks, but does not justify the premium.

A business plan is needed, not a purchasing plan.

It doesn't mean that all Bitcoin treasury companies should be traded below NAV. However, a premium requires a business strategy that goes beyond mere fundraising and purchasing strategies.

A strong Bitcoin balance sheet can serve as a robust foundation for business. In the financial world, a balance sheet forms the basis for lending, trading, and the composition of financial products, and there is a possibility that future financial giants will emerge from the current Bitcoin treasury companies.

Brokerage, liquidity provision, collateralized lending, and structured products are all scalable business models that can generate revenue and justify premium valuations.

On the other hand, simply raising funds to seek "Bitcoin yield" is not a business plan. If a simple Bitcoin treasury company cannot build a business plan, the premium will collapse. Ultimately, it may be acquired by a company that can actually utilize Bitcoin.

Bitcoin has become a new hurdle rate (target yield). To surpass Bitcoin, simply holding it is not enough. It is necessary to find a way to build a business based on Bitcoin.

|Translation/Editing: CoinDesk JAPAN Editorial Department |Image: ｜Original: Without Operational Alpha, Bitcoin Treasury Company Premiums Will Collapse

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