Capital is torn between panic and greed, and the business model of digital asset treasury companies is facing a severe test.
Digital asset treasury companies are facing unprecedented stress tests. As the cryptocurrency market continues to languish, companies that buy Bitcoin, Ethereum, and other cryptocurrencies through borrowing or fundraising have seen their stock prices drop far more than the value of the tokens they hold.
In the past month, MicroStrategy's stock price fell by 25%, BitMine Immersion dropped by over 30%, while Bitcoin's decline during the same period was 15%. This extreme performance has raised doubts about the business model of 'leveraging cryptocurrency'.
One, capital tearing: some escape while others hold firm
In the winter of the cryptocurrency market, institutional investors show a starkly different attitude towards digital asset treasury companies.
● Peter Thiel's Founders Fund reduced its stake in BitMine (BMNR) by half, while Cathie Wood's ARK Invest and JPMorgan chose to increase their positions contrary to the trend.
● On November 6, ARK Invest increased its holdings by 215,000 shares of BitMine stock, valued at approximately $8.06 million. This capital tearing attitude highlights the market's divergence on the outlook for digital asset treasury companies.
● Wall Street's well-known short-seller Jim Chanos has consistently shorted MicroStrategy while buying Bitcoin, believing that investors have no reason to pay a premium for Saylor's company. However, last Friday, he told clients it was time to close this trade. Chanos noted that while treasury company stocks are still overvalued, the premium level is no longer extreme, "this trade logic has basically been realized."
Two, BitMine's predicament: a floating loss of $3 billion and cash consumption
As the second largest cryptocurrency treasury company after MicroStrategy, BitMine is facing immense market pressure.
● As of November 20, BitMine holds 3.56 million ETH, accounting for nearly 3% of the circulating supply, having surpassed half of its long-term target of 6 million ETH. However, based on an average purchase price of $4,009, BitMine's paper loss has approached $3 billion.
● The company's stock price has fallen about 80% from its July peak, with a current market value of approximately $9.2 billion, below its ETH holding value of $10.6 billion (based on ETH at $3,000). Its mNAV (modified net asset value) has dropped to 0.86, reflecting market concerns about the company's floating losses and cash sustainability.
● Investors' focus has shifted from 'how much more can be bought' to 'how much longer can it last'. Currently, BitMine's cash reserves are approximately $607 million, with funding primarily coming from cryptocurrency asset income and secondary market financing.
Three, MicroStrategy's aggressive strategy: continuous bottom-fishing and financing innovation
Unlike BitMine, MicroStrategy (now renamed Strategy) continues to maintain an aggressive buying strategy despite the market downturn.
● Between November 10 and 20, Strategy acquired 8,178 Bitcoins, worth approximately $835.6 million, marking the company's largest Bitcoin acquisition since the end of July.
● This purchase brings Strategy's total holdings to 649,870 Bitcoins, accounting for more than 3% of the total Bitcoin supply. The total cost of these Bitcoins is approximately $48.37 billion, with an average purchase price of $74,433.
● Strategy's latest acquisitions are primarily financed through the proceeds of its new preferred stock issuance. The company raised approximately $715 million through its STRE or 'Stream' series, extending its high-yield tools to European investors. It also obtained an additional $131.4 million through its STRC or 'Stretch' preferred series.
Four, leverage effects and the disappearance of premiums
The core issue with digital asset treasury companies is that investors are essentially paying a premium far above the net asset value of the company holding the cryptocurrency.
● Brent Donnelly, president of Spectra Markets, bluntly stated: "This whole concept makes no sense to me. You're just using $2 to buy a $1 bill. Ultimately, these premiums will be compressed."
● The leverage effect is amplified during downturns. Matthew Tuttle stated, "Digital asset treasury companies are essentially leveraged crypto assets, so when cryptocurrencies fall, they fall even more." The MSTU ETF he manages aims to provide double the return of MicroStrategy, but has plummeted 50% in the past month.
● When digital currency treasury companies first emerged, they provided avenues for institutional investors who had previously found it difficult to invest directly in cryptocurrencies. However, cryptocurrency exchange-traded funds launched in the past two years are already able to offer the same solutions, weakening the unique value proposition of treasury companies.
Five, buying power has fully receded
The current environment facing the cryptocurrency market is exceptionally severe, with major buying powers receding.
● There has been a continuous outflow of funds from Bitcoin and Ethereum spot ETFs. On November 19, the Bitcoin spot ETF saw a $254.5 million outflow, while the Ethereum spot ETF experienced a $182.8 million outflow. This marks the fourth consecutive day of net outflows for the Bitcoin ETF and the fifth day for the Ethereum ETF.
● LVRG Research Director Nick Ruck stated: "This outflow trend indicates a cautious attitude among institutional investors, reflecting broader macroeconomic headwinds, such as fiscal uncertainty and heightened interest rate expectations, that are eroding the 'store of value' narrative for these traditional assets."
On-chain, Glassnode data reports that long-term holders (addresses holding for over 155 days) are currently selling approximately 45,000 ETH daily, equivalent to about $140 million. This is the highest selling level since 2021, indicating a weakening bullish force.
Six, the value mismatch debate: BitMine's potential opportunities
Amidst market pessimism, voices suggesting that BitMine has value mismatches are gradually emerging.
● Compared to MicroStrategy's path, BitMine has chosen a completely different strategy. MicroStrategy heavily relies on convertible bonds and preferred shares for fundraising in the secondary market, with annual interest burdens of hundreds of millions of dollars, while profitability depends on a one-sided rise in Bitcoin.
● Although BitMine has diluted equity through new stock issuance, it has virtually no interest-bearing debt, while its held ETH contributes approximately $400-500 million in staking income annually, making this cash flow relatively rigid.
● As one of the largest institutional holders of ETH globally, BitMine can fully utilize staked ETH for restaking (earning an additional 1-2%), operating node infrastructure, locking in fixed income through yield tokenization, and even issuing institutional-grade ETH structured notes. These operations are not achievable with MicroStrategy's BTC holdings.
● Currently, BitMine's market capitalization is trading at approximately a 13% discount to its ETH holding value. Within the entire DAT sector, this discount is not the most exaggerated but is significantly lower than the market's historical pricing center for similar assets.
As of November 20, Bitcoin has fallen back to $91,253 after significant volatility, while Ethereum has broken below the critical support of $3,000. Amidst the market's wailing, Strategy's Michael Saylor continues to claim on social media that Bitcoin is on "sale."
Treasury company stock prices have fallen to historical lows, with BitMine's mNAV at 0.86 and Strategy's mNAV around 0.93. The market stands at a crossroads, with one side being the potential end of the treasury model being replaced by ETFs, and the other side being a once-in-a-lifetime valuation repair opportunity.
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