Bitcoin Holding Companies Go All-Out on M&A After $69 Billion Loss

▲ Bitcoin (BTC), S&P 500/AI generated image

Bitcoin (BTC) holding companies are abandoning simple accumulation strategies and shifting towards acquiring cash-generating businesses.

According to U.S. economic media Benzinga on September 2 (local time), Bitcoin treasury companies are moving away from business models that relied on price increases and are exploring strategies to acquire profitable companies. A Bloomberg compilation, citing Artemis data, showed that the fully diluted market capitalization of Bitcoin treasury company stocks decreased by approximately $69 billion from its peak of $141 billion in October last year. The structural weakness of Bitcoin, which does not generate its own cash flow and must rely on issuing equity or debt for further purchases, has been highlighted.

Mitty Chang, Chief Growth Officer at Sora Ventures, defined the new strategy as Digital Asset Treasury (DAT) 3.0. Chang cited robust capital allocation, operational businesses, and the ability to adapt to change as conditions for companies to survive. Sora Ventures, which has invested in several digital asset treasury companies in Asia, is reportedly pursuing $1 billion in funding to support the establishment of recurring revenue bases for its portfolio companies.

Twenty One Capital also plans to move beyond Bitcoin accumulation to acquire profitable companies. CEO Raphael Zagury announced his vision to acquire profitable businesses within the Bitcoin ecosystem to enhance long-term shareholder value. He likened the model of combining Bitcoin holdings with cash-generating businesses, with financial statements at the core of the strategy, to Berkshire Hathaway (BRK).

Nakamoto (NAKA) is also considering a similar path. With its listing status threatened by sluggish stock prices, it is looking into acquiring companies that can generate funds for future Bitcoin purchases independently. CEO David Bailey stated, "I've been thinking about what kind of companies a Bitcoin nation's sovereign wealth fund would own." The goal is to secure a revenue structure that can continue Bitcoin purchases while reducing reliance on equity or debt issuance.

For the new model of Bitcoin treasury companies to succeed, a structure is needed that can utilize held Bitcoins in a bear market without compromising financial soundness. As the aggressive accumulation strategy, which worked when Bitcoin prices and company stock prices rose together, falters, securing businesses that generate cash flow has emerged as a new survival strategy.

[Article Key Summary]

-The fully diluted market capitalization of Bitcoin treasury company stocks decreased by approximately $69 billion from its peak of $141 billion in October last year.

-Twenty One Capital and Nakamoto are pursuing acquisitions of cash-generating companies rather than continuing only Bitcoin accumulation.

-The industry sees a Berkshire Hathaway-style model, combining Bitcoin holdings with profitable businesses, emerging as a new survival strategy.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*