The Breakdown - The State of Bitcoin Treasury Critique

Episode Date: July 13, 2025

On today's Long Read Sunday, NLW explores two critiques of the growing phenomenon of Bitcoin treasury companies. First, Bloomberg columnist Lionel Laurent argues that corporate Bitcoin purchases signal a frothy market frenzy reminiscent of past speculative bubbles. Then, K33’s Torbjørn Bull Jenssen warns that without an actual operational strategy beyond simply buying Bitcoin, these companies' market premiums are doomed to collapse. NLW dissects where these critiques land—and where they miss the mark—in a thoughtful discussion about the real financial engineering at play and what might come next for Bitcoin treasury firms. Sources: https://www.coindesk.com/opinion/2025/07/07/without-operational-alpha-bitcoin-treasury-company-premiums-will-collapse https://www.bloomberg.com/opinion/articles/2025-07-09/bitcoin-buying-and-coffee-are-too-frothy-a-mix?sref=qUxVp6JU Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/@TheBreakdownBW Subscribe to the newsletter: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://blockworks.co/newsletter/thebreakdown⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownBW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Sunday, July 13th, and that means it's time for Longreed Sunday. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, today we are talking about one of the big themes driving Bitcoin and crypto conversation in the public markets, which is, of course, the Treasury companies.

And you can tell that these things have become a major theme because they are getting critiques out the woodwork. Today we are looking at two critiques, neither of which I particularly love, but both of which I feel like are instructive in some way, as a way to get a sense of where the discourse is. And with the first one, we're going to go super mainstream. The piece is by a Bloomberg opinion columnist Lionel Laurent, and it's called When Coffee Shops by Bitcoin, things get frothy. Let's turn it over to the 11 Labs version of me, and then we will come back and discuss. Economist Carlotta Perez once described the peak frenzy of boom and bust investing cycles as the moment when capital gains are copy and pasted, with financiers indulging in

the intense repetition of the same successful recipe, from building canals to launching dot-com startups. It rarely ends well. Perez was writing over 20 years ago, but it's easy to see the similarities with the latest froth on financial markets. Companies that tap capital markets for cash, use that cash to buy cryptocurrency, watch their shares rise and do the whole thing again. What began with Michael Saylor's Micro Strategy Inc, now just Strategy, a software company valued at more than 200 times revenue because of the 597,625 Bitcoin, 64.8 billion, it owns, has now gone viral as hundreds of new and existing businesses build their own cryptocurrency stash. It probably won't end well either. A look at some of the

most recent converts to so-called Bitcoin corporate treasury tells you that the froth is real. Shares of Spanish small-cap Vanadi Coffee SA, which fell 90% in 2024, have doubled since it announced its first Bitcoin buy in May, a venture with little connection to its unprofitable core cafe business. The company's latest filing reports a holding of 69 Bitcoin with a longer-term target of 10,000, a strategy explicitly modeled on firms like Sailor's Strategy and Tokyo-listed Metaplanet Inc. With Vanadi pointing out that those companies' own pursuit of asset diversification has delivered premium valuations. Never mind that those premium valuations will make less sense as more copycats emerge. Talk of diversification is, let's face it, a handwave. Most corporate

treasurers are a risk-averse lot. Their idea of managing cash doesn't usually involve buying volatile tokens that are neither useful for paying wages nor selling wares. These treasury companies look more like the latest rinse and repeat crypto-grift, similar to initial coin offerings a decade ago and non-fundable tokens five years ago, which attracted players wielding increasing amounts of leverage until the inevitable crash. The only difference this time is that publicly listed companies, and not retail traders, are the ones lining up to help separate whales from their crypto. And as in previous cycles, new arrivals are already moving up the speculation chain. Bitmine Immersion Technologies Inc. saw its stock surge more than 3,000% after shifting into Ethereum.

How long before a dogecoin treasury is announced? Those of a more forgiving bent will argue this is exactly the kind of speculative trial and error that self-correcting markets can handle. If there is investor demand for exposure to crypto vehicles, and clearly there is, judging by Circle Internet Group Inkin's recent initial public offering and Robin Hood Markets Inkeny's hype-fueled tokenized securities pitch, then it only makes sense for more players to hop aboard the bandwagon and offer supply to match. Even if the music stops soon, it will stop without having swept up big blue-chip firms like Microsoft Corp, whose shareholders recently rejected a proposal to add Bitcoin to its balance sheet. The trend could just fade away, says Skybridge Capital founder and managing partner Anthony

Scaramucci, but there are risks that deserve more than a shrug and an eye roll. One is that this is exactly the kind of thing that turns a crypto sell-off into a crash. Weak indebted companies stuffed with overpriced tokens could create a wave of forced selling. The crypto speculation complex is also pushing to embed itself in the Tradfai system with banking license applications, which could make those waves worse. And while Bitcoin maximalists like to believe that their favorite token is a safe haven, it fell more than 50% in the last crash. Then there's the question of whether this is all a sign of wider irrational exuberance. The best performing S&P 500 company in the second quarter was Coinbase Global Inc. And since the start of the year was Palantir Technologies Inc. and nothing to do

with the MAGA manufacturing renaissance that the Trump administration is hoping to create. Is this being driven by useful innovation, such as the new financial services that might be offered by a more blockchain-native ecosystem? Or is it, as Perez wrote, the speculative task of making money from money? The canal boom left us with canals and the dot-com boom with big tech. It feels like Bitcoin treasury companies will leave us with not much at all. All right, back to NLW here. First of all, for the sake of trying to find something that's not just a full-on critique. Let's look at where, if anywhere, I agree here. When Lionel claims that in general, the discussion of diversification as a justification

for the treasury companies is a handwave, I don't think that he's wrong. However, I think that that fundamentally misunderstands what most of these companies are trying to do. The Bitcoin Treasury phenomenon is not, in fact, the Bitcoin Treasury phenomenon that we thought we were going to get. This Bitcoin Treasury phenomenon is all about a new type of approach to accumulating Bitcoin through public market vehicles. Now, I do think, and if you listen regularly, you will have heard that there's plenty of reasons to critique that, but this is not the critique. In fact, and I apologize for using this particular example as a punching bag, because the discourse is still fairly ubiquitous. This to me is just a great reminder of why we need

better critique. This comes as close to calling Bitcoin Beanie Babies as a modern piece would. The idea of lazily lumping in Bitcoin Treasury companies with ICOs and NFTs, without actually explaining what's going on here doesn't actually help protect people. It just makes people roll their eyes because they can tell that this is someone who just doesn't like crypto, plain and simple. Again, the vague, hand-wavy notions of the music coming to a stop or pick your other trope serve no one, including the Bloomberg editorial pages that don't get a banger out of this. So what could this critique have said that would have been better? Well, it might have taken the time to spend five minutes actually understanding what these companies are doing and bringing up very reasonable

questions around the specifics of the financial engineering. What approaches to debt are companies using? What types of volatility risks does that introduce? Could there be any of the sort of cascading behavior that's been problematic in the past? None of those questions get asked here, because it's clear the author doesn't care to take the time to actually engage with it. Look, we're past the point where you get to say lines like weak- indebted companies stuffed with overpriced tokens could create a wave of force selling and not explain what you're actually talking about. It gives the impression that you don't know what you're talking about, in fact, which my guess is isn't true for Lionel. My guess, in fact, is that this is the product of being annoyed that people in the mainstream financial media have

to pay attention to Bitcoin and crypto again. And while I have no idea what this particular author views as their role in this whole ecosystem, to the extent that they are hoping to protect people or get them to think more holistically and with clearer eyes about these sort of investments, mission not accomplished, man. Today's episode of The Breakdown is brought to you exclusively gray scale. Grayscale is almost certainly a name you know. They've been offering exposure to crypto for over a decade now and offer over 20 different crypto investment products ranging from single asset to diversified to thematic exposure to crypto and the broader crypto industry. They have long been innovators at the intersection of Tradfai and Crypto, and one of the benefits

for a lot of us is that grayscale products are available right through your existing brokerage IRA. Now, of course, investing involves risk, including possible loss of principle. For more information and important disclosures, visit grayscale.com. Go to grayscale.com to explore their full suite of crypto investment products and invest in your share of the future. Next up we have another piece, this time appearing on CoinDesk, so you would presume it's someone who's a little bit more in the space. It's from K-33's Torbrian-Bold Jensen, and it's called, without operational Alpha, Bitcoin Treasury Company premiums will collapse. Again, I'm going to hand it over to the 11 Labs version of myself, and then I will be back with some commentary.

Listed companies are rapidly transforming into Bitcoin Treasury vehicles, raising capital to buy BTC and hold it on their balance sheets. With Bitcoin increasingly seen as a potential global reserve asset gaining institutional traction and strong price expectations, this trend might seem sound. But there's a problem. Most of these companies have acquisition plans, without a business plan? Why buy at a premium when you can buy Bitcoin directly? Almost any investor can buy Bitcoin directly, either spot or via ETFs. So why invest through a listed company trading at a significant premium to the net asset value of its Bitcoin? The short answer is, you shouldn't, unless the company has a clear strategy for putting its Bitcoin to work in a way investors can't

easily replicate. Holding BTC must serve an operational purpose. Otherwise, the company should return the capital and let shareholders buy Bitcoin on their own terms. Section, Bitcoin yield does not equal business model. To justify premiums, some analysts now use the concept of Bitcoin yield, the percentage increase in BTC per share over time. While it's an interesting KPI to track, it doesn't justify a premium to NAV on its own. Yes, if a company issues equity at a premium above NAV and buys more BTC, it can increase

BTC per share. But if an investor's goal is to gain the maximum Bitcoin exposure per dollar invested, investors should just buy BTC directly. Section. Leveraged long with limited upside. To speed up their acquisitions, many treasury companies raise capital through various types of convertible debt. The result is a leveraged long position in Bitcoin, with full downside exposure and limited upside. This structure is exactly why creditors have been eager to underwrite such instruments. If Bitcoin falls, creditors get repaid in USD, while the company may be forced to sell its BTC holdings to cover the debt. If Bitcoin rises, creditors convert their debt into shares at a discount and sell them to capture the upside above the conversion price, that's upside that would otherwise

belong to shareholders. As an investor choosing between buying into a leveraged Bitcoin equity company, or simply taking on leverage against your own BTC, you have to ask, is the reduced upside worth avoiding the work of doing it yourself? If the company also trades at a substantial premium to its underlying Bitcoin and lacks any operational plan beyond buying and holding BTC, the answer is likely no. The same applies to other simple risk-taking strategies, such as lending out BTC in exchange for interest.

They introduce risk, but do little to justify the premium. Section, a business plan, not just a BTC plan. This doesn't mean all Bitcoin treasury companies should trade at or below nav, but a premium requires more than a funding and acquisition strategy. It requires a business strategy. A strong Bitcoin balance sheet can serve as a powerful foundation for an operational business. In finance, balance sheets are the basis for lending, trading, structuring, and more. And some of the current Bitcoin treasury companies will likely emerge as financial giants of the future. Brokerage, liquidity provision, collateralized lending and structured products are all examples of operational models that can scale,

generate revenue, and justify premium valuations. By contrast, simply raising funds to chase Bitcoin yield is not a business plan. If a pure play treasury company doesn't develop an operational plan, its premium will collapse, and it may eventually be acquired by a firm that does know how to put Bitcoin to work. Bitcoin is the new hurdle rate. To beat BTC, companies must do more than just buy, and hold it. They must figure out how to build a Bitcoin-based business. All right, real NLW back here. So we are obviously much closer to meeting the mark of a good critique here. I will say two things. First of all, I think that treasury companies would just fundamentally disagree with a lot of the assessments here. Again, this is hung up on the idea that

the point of a Bitcoin treasury company is to be a normal company that also holds Bitcoin, when very clearly that isn't what Bitcoin Treasury companies are doing. They are using the husks of previous companies to just be Bitcoin acquisition vehicles, taking advantage of the financial engineering opportunities of the public markets. Now, one can think that's a bad idea, but that is very clearly the idea. In other words, they're going after a goal that's not explicitly discussed here. The flip side, however, is that this is part of a rising discourse that actually is thinking about what comes after the arbitrage trade inherent in these companies. And giving Jensen's point some heft is the fact that Metaplanet started talking about similar things this week,

basically saying that at some point, the trade that is at the core of the Bitcoin Treasury companies will no longer work. And at that point, their plan at least is to start acquiring companies with positive cash flows that can create a new way to acquire more Bitcoin and be a successful company. The point being that while Jensen may be a little early in terms of how these companies are thinking about things, a lot of the smart companies are having a similar conversation internally. It's a great reminder to me that at this stage, if you want good critique of Bitcoin and Crypto, you basically have to look to Bitcoin and Crypto people. Still, I will say that for any amount

of critique that I've had for these authors this week, I still appreciate them trying to contribute to the broader discourse. And of course, a big thank you to you guys for listening. Until next time, be safe and take care of each other. Peace.