The New Trend of Listed Companies: A Comprehensive Deconstruction of Crypto Assets Reserve Economic Model

Introduction

By mid-2025, an increasing number of publicly listed companies are beginning to incorporate Crypto Assets (, especially Bitcoin ), into their treasury asset allocation. According to blockchain analysis data, in June 2025 alone, 26 new companies added Bitcoin to their balance sheets, bringing the total number of companies holding BTC worldwide to about 250.

These companies span multiple industries ( technology, energy, finance, education, etc. ) and different countries and regions. Many companies view Bitcoin's limited supply of 21 million as a hedge against inflation and emphasize its low correlation with traditional financial assets. This strategy is quietly moving towards the mainstream: as of May 2025, 64 companies registered with the SEC collectively hold approximately 688,000 BTC, accounting for about 3-4% of the total Bitcoin supply. Analysts estimate that over 100-200 companies worldwide have incorporated Crypto Assets into their financial statements.

Crypto Assets reserve model

When a publicly traded company allocates part of its balance sheet to Crypto Assets, a core question arises: how did they finance the purchase of these assets? Unlike traditional financial institutions, most companies adopting a crypto treasury strategy do not rely on cash flow from their core business to support this. The following analysis will primarily use MicroStrategy as an example, as most other companies are actually replicating its model.

Main business cash flow

Although theoretically the "healthiest" and least dilutive way is to purchase Crypto Assets through the free cash flow generated by the company's core business, in reality, this approach is nearly impossible. Most companies themselves lack sufficiently stable and large-scale cash flow, making it fundamentally impossible to accumulate a large reserve of BTC, ETH, or SOL without external financing.

Taking MicroStrategy as a typical example: the company was founded in 1989 and originally focused on business intelligence software, with its main products including HyperIntelligence, AI analytics dashboards, and others. However, these products still generate only limited revenue to this day. In fact, MicroStrategy's annual operating cash flow is negative, far from the hundreds of billions of dollars it has invested in Bitcoin. This shows that MicroStrategy's Crypto Assets treasury strategy has never been based on internal profitability, but rather relies on external capital operations.

A similar situation has occurred at SharpLink Gaming. The company transitioned to an Ethereum vault carrier in 2025, purchasing over 280,706 ETH( worth approximately $840 million). Clearly, it could not rely on the revenues from its B2B gaming business to accomplish this operation. SharpLink's capital formation strategy primarily relies on PIPE financing( private investment in public equity) and direct stock issuance, rather than operational income.

Capital Market Financing

Among listed companies adopting encryption treasury strategies, the most common and scalable approach is to raise funds through public market financing, by issuing stocks or bonds, and using the proceeds to purchase Bitcoin and other Crypto Assets. This model allows companies to build large-scale encryption treasuries without utilizing retained earnings, fully leveraging financial engineering methods from traditional capital markets.

Issuing Stocks: A Traditional Dilutive Financing Case

In most cases, issuing new shares comes with costs. When a company raises funds by issuing additional shares, two things usually happen:

1. Ownership is diluted: The shareholding ratio of existing shareholders in the company decreases.
2. Earnings per share ( EPS ) decreased: Under the condition of unchanged net profit, an increase in total share capital leads to a decrease in EPS.

These effects usually lead to a decline in stock prices, primarily for two reasons:

• Valuation logic: If the price-to-earnings ratio (P/E) remains unchanged while EPS declines, the stock price will also drop.
• Market Sentiment: Investors often interpret financing as a sign that a company lacks funds or is in trouble, especially when the raised funds are used for unproven growth plans. Additionally, the influx of new stocks into the market creates supply pressure that can lower market prices.

An exception: MicroStrategy's anti-dilution equity model

MicroStrategy is a typical counterexample to the traditional narrative of "equity dilution = shareholder loss." Since 2020, MicroStrategy has been actively purchasing Bitcoin through equity financing, with its total outstanding shares growing from less than 100 million to over 224 million by the end of 2024.

Despite the dilution of equity, MicroStrategy's performance often surpasses that of Bitcoin itself. Why? Because MicroStrategy has been in a state where "market value exceeds the net value of its held Bitcoin," which we refer to as mNAV > 1.

Understanding Premium: What is mNAV?

• When mNAV > 1, the market values MicroStrategy higher than the fair market value of its held Bitcoin.

In other words, when investors gain exposure to Bitcoin through MicroStrategy, the price paid per unit is higher than the cost of directly purchasing BTC. This premium reflects the market's confidence in Michael Saylor's capital strategy and may also represent the market's belief that MicroStrategy offers leveraged, actively managed BTC exposure.

Support of traditional financial logic

Although mNAV is a crypto-native valuation metric, the concept of "trading price being higher than the underlying asset value" has long been prevalent in traditional finance.

The reasons why the company often trades at a price higher than its book value or net assets are mainly as follows:

Discounted Cash Flow ( DCF ) Valuation Method

Investors are focused on the present value of the company's future cash flows (, rather than just the assets it currently holds.

This valuation method often leads to the company's trading price being much higher than its book value, especially in the following situations:

• Expected growth in revenue and profit margin
• The company has pricing power or a technological/commercial moat

Example: Microsoft's valuation is not based on its cash or hardware assets, but rather on its future stable subscription software cash flow.

Profit and Revenue Multiple Valuation Method ) EBITDA (

In many high-growth industries, companies typically use P/E) price-to-earnings ratio( or revenue multiples for valuation:

• High-growth software companies may trade at multiples of 20-30 times EBITDA;
• Early-stage companies may trade at 50 times revenue or higher even without profits.

Example: Amazon's price-to-earnings ratio reached as high as 1078 times in 2013.

Despite thin profits, investors are still betting on its future dominance in e-commerce and AWS.

MicroStrategy has advantages that Bitcoin itself does not possess: a corporate shell that can access traditional financing channels. As a publicly traded company in the United States, it can issue stocks, bonds, and even preferred shares to raise cash, and it has indeed done so with remarkable results.

Michael Saylor cleverly utilizes this system: he has raised billions of dollars by issuing zero-interest convertible bonds and the recently launched innovative preferred stock products, and he has invested all these funds into Bitcoin.

Investors recognize that MicroStrategy is able to leverage "other people's money" to purchase Bitcoin on a large scale, and this opportunity is not easily replicated by individual investors. The premium of MicroStrategy "is not related to short-term NAV arbitrage," but rather comes from the market's high confidence in its capital acquisition and allocation capabilities.

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)# mNAV > 1 How to achieve anti-dilution

When MicroStrategy's trading price exceeds its net asset value of held Bitcoin ###, i.e., mNAV > 1(, the company can:

1. Issue new shares at a premium price
2. Use the raised funds to purchase more Bitcoin )BTC(
3. Increase total BTC holdings
4. Promote the synchronization of NAV and Enterprise Value ) Enterprise Value ( to rise.

Even in the case of an increase in circulating shares, the amount of BTC held per share )BTC/share( may remain stable or even increase, making the issuance of new shares a anti-dilution operation.

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)# What happens if mNAV < 1?

When mNAV < 1, it means that each dollar of MicroStrategy stock represents a BTC market value exceeding one dollar ### at least on paper (.

From the perspective of traditional finance, MicroStrategy is trading at a discount, that is, below its net asset value )NAV(. This presents challenges in capital allocation. If the company raises funds through equity financing to buy BTC under these circumstances, from the shareholders' perspective, it is actually buying BTC at a high price, thus:

• Dilution of BTC/share) per share BTC holding (
• and reduce the value of existing shareholders

When MicroStrategy faces the situation where mNAV < 1, it will be unable to maintain that "issue new shares → purchase BTC → increase BTC/share" flywheel effect.

So what options are there at this time?

)# Buy back stocks instead of continuing to buy BTC

When mNAV < 1, repurchasing MicroStrategy shares is a value-accretive action ###, for reasons including:

• You are repurchasing stocks at a price lower than their intrinsic value in BTC.
• As the number of circulating shares decreases, BTC/share will increase.

Saylor has explicitly stated: if the mNAV is below 1, the best strategy is to repurchase shares rather than continue buying BTC.

(# Method 1: Issue Preferred Stock)

Preferred stock is a hybrid security that lies between debt and common stock in a company's capital structure. It typically provides fixed dividends, has no voting rights, and has priority over common stock in profit distribution and liquidation. Unlike debt, preferred stock does not require repayment of principal; unlike common stock, it can provide more predictable income.

MicroStrategy has issued three classes of preferred shares: STRK, STRF, and STRC.

STRF is the most direct tool: it is an unconvertible perpetual preferred stock that pays a fixed cash dividend of 10% annually on a par value of $100. It has no equity conversion option and does not participate in the stock appreciation of MicroStrategy, but only provides yield.

The market price of STRF will fluctuate around the following logic:

• If MicroStrategy needs financing, it will issue more STRF, thereby increasing supply and lowering the price;
• If the market's demand for returns surges ### like during periods of low interest rates (, the price of STRF will rise, thereby lowering the effective yield;
• This forms a price self-adjusting mechanism, where the price range is usually narrow, for example $80-$100, driven by yield demand and supply.

Example: If the market requires a 15% return, the STRF price may drop to $66.67; if the market accepts 5%, it may rise to $200.

Since STRF is a non-convertible, essentially non-redeemable instrument ) unless triggered by tax or capital conditions (, its behavior is similar to that of a perpetual bond, allowing MicroStrategy to repeatedly "bottom fish" BTC without the need for refinancing.

STRK is similar to STRF, with an annual dividend of 8%, but it has an important feature: it can be converted into common stock at a 10:1 ratio when MicroStrategy's stock price exceeds $1,000, which is equivalent to embedding a depth.