The Largest Corporate Bitcoin Holder Now Trades Below the Value of Its Coins
Strategy holds roughly 818,869 bitcoin acquired at an average cost above $75,000, has sold four times this year to meet obligations, and briefly saw its market value fall below its holdings.
The company that pioneered the corporate bitcoin treasury is now demonstrating the strategy's failure mode.
Strategy holds roughly 818,869 bitcoin at an average acquisition cost above $75,000 a coin. With bitcoin trading in the low $60,000s, the position is underwater. The company reported a net loss of about $12.54 billion in the first quarter, driven by roughly $14.46 billion of unrealized losses on its holdings.
More consequentially, its market capitalization briefly fell below the value of the bitcoin it owns — a ratio investors track as mNAV, and a level that inverts the entire logic of the business.
Why the premium existed
For four years, the company traded far above the value of its coins. The premium had a rational basis: the company could issue stock at a premium, use the proceeds to buy more bitcoin, and thereby increase bitcoin per share. Investors were paying for a machine that reliably converted market enthusiasm into more of the underlying asset.
That machine only runs in one direction. When the shares trade below the value of the holdings, issuing stock to buy bitcoin destroys value for existing shareholders instead of creating it.
The obligations
The financing that funded the accumulation now requires servicing. The company has issued perpetual preferred shares carrying dividend rates as high as 11.25%, alongside convertible debt.
Those payments require cash, and the company's operating business does not generate enough of it. It has disclosed that it may sell portions of its holdings to fund dividends and debt repurchases, and it has sold bitcoin four times this year, most recently around 1,690 coins for roughly $108.6 million.
Why the whole market watches
The company holds a substantial share of all bitcoin that will ever exist. Any scenario in which it becomes a forced seller is a scenario in which the market absorbs supply from the largest single corporate holder at exactly the moment demand is weakest.
The June rout erased roughly $62 billion of combined market value from public companies holding bitcoin on their balance sheets. That is the cost of a model that worked beautifully while the price rose and that has no equivalent mechanism for a decline.
