VanEck is warning that the Bitcoin treasury strategy adopted by several public companies may be on shaky ground, as rising risks threaten to erode rather than enhance shareholder value.
The firm’s head of digital assets research, Matthew Sigel, said some firms are approaching a critical threshold, where continued Bitcoin accumulation may end up eroding, rather than creating, shareholder value.
In a Monday X post, Sigel pointed to the growing risk posed by at-the-market, or ATM, share issuance programs used by these firms to fund Bitcoin purchases.
Time for Safeguards as Premiums Shrink?
When stocks trade well above their Bitcoin net asset value, or NAV, issuing new equity brings in a premium. But once that stock price nears parity with the value of its Bitcoin holdings, dilution sets in.
“That is not capital formation. It is erosion,” Sigel wrote. He argued that companies using Bitcoin as a treasury asset should adopt guardrails while premiums still exist.
Among the measures he recommends is pausing ATM programs if the stock trades below 0.95 times NAV for 10 or more trading days. Additionally, he suggests launching strategic reviews if the discount continues. He also advises prioritizing buybacks when Bitcoin rises but the stock price does not reflect that gain.
VanEck Flags Familiar Pattern as BTC-Rich Firms Face Shareholder Pain
Sigel added that executive compensation should be tied to NAV per share growth. In contrast, it should not depend on the size of a firm’s Bitcoin holdings or the total number of shares issued.
He drew comparisons to the crypto mining sector, where relentless share issuance and inflated pay packages led to long-term shareholder losses. “No need for a sequel,” he warned.
While no public company has consistently traded below its Bitcoin NAV, VanEck’s Sigel noted that Semler Scientific, a California-based medical technology firm, is now close. Semler entered the crypto market in May 2024 and has since accumulated 3,808 BTC, worth roughly $405m.
Despite Bitcoin’s strong performance this year, Semler’s stock has dropped more than 45% year to date, dragging its market capitalization to about $435m.
As a result, its multiple of NAV, or mNAV, has slipped below 1x, landing near 0.82x. The gap shows that investor confidence in Bitcoin does not always lead to equity gains. This is especially true when companies rely on aggressive capital raises to fund their crypto purchases.
Semler, like many firms pursuing a Bitcoin treasury strategy, has raised funds through both equity and debt offerings. This approach is based on the belief that rising Bitcoin prices will eventually boost the stock as well.
However, as Sigel pointed out, those gains are never guaranteed. Without structural discipline, companies risk eroding value just as fast as they aim to create it.
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