The Breakdown - Who is Funding These Bitcoin Treasury Companies?

Episode Date: June 3, 2025

Bitcoin treasury companies are multiplying fast—some with billions in backing, others chasing quick gains. Today’s episode examines who’s funding these firms, how the Michael Saylor playbook is evolving, and whether we’re watching the rise of a sustainable trend or the start of a new crypto bubble. 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 Grayscale offers more than 20 different crypto investment products. Explore the full suite at grayscale.com. Invest in your share of the future. Investing involves risk and possible loss of principal. To learn more, visit Grayscale.com -- https://www.grayscale.com//?utm_source=blockworks&utm_medium=paid-other&utm_campaign=brand&utm_id=&utm_term=&utm_content=audio-thebreakdown)

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 Monday, June 2nd, and today we are talking about who is actually funding all these Bitcoin treasury companies. 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. Last week was all about the Bitcoin Conference, and really the Bitcoin Conference was all about the Michael Saylor Strategy.

So it is appropriate that the man himself had the closing keynote. In that closing keynote, he said that he believes that Bitcoin is the ultimate form of capital. Quote, every thoughtful individual everywhere in the world is going to want perfected capital. Every one of your enemies is going to want incorruptible capital, and all of the AIs are going to want programmable capital. Repeating as usual orange-tinged rallying cry, Saylor said, Bitcoin is engineered to outperform everything.

Take your fiat currency, trade it for Bitcoin. Take your long-term capital, trade it for Bitcoin. Sell your bonds. Trade them for Bitcoin. Sell your inferior equity. Sell your inferior real estate property. Buy Bitcoin. However, this speech was noteworthy because Sailor is no longer just selling the world

on Bitcoin exposure. He's representing a new category of investments in the form of Bitcoin Treasury companies. Now, if you listen to the Friday show, Scott Melker mentioned that one of his big takeaways from the conference was that Bitcoin treasury companies are sprouting up everywhere. He said that he was pitched something like 25 deals as soon as he hit the conference floor. Saylor was selling this category hard, adding a new section to his well-worn pitch. He said that it was another way to wealth through equity, stating,

it means share your opportunity with investors willing to share your risk. A company can do this, an individual cannot. Metaplanet has done this. Metaplanet has done this. Metaplanetka went from 10 million to a $5 billion market cap with the partnership of their equity investors. Now, Sailor is not pitching the dozens of tiny Bitcoin companies that Scott was talking about, and even comparing to the ICO bubble, he is representing the more conservative strategies that he pioneered. He even included a long section about compliance stating, you should create the best company you can within the rules of your market, a slide which got a lot of queasy responses on Twitter, let's say, for more hardcore bitcoiners. Sailor continued, while compliance sounds like a difficult world, if you create a company

and you understand the rules of the road and the market you function in, you can create a special, very productive enterprise. And then you can use the power of that enterprise in order to raise capital, invest in Bitcoin, and create wealth. Now, of course, if we are in the midst of seeing a rush of flyby-not operations hitting the public markets, compliance might not be at the top of their priorities list. But Saylor and several of the more prominent Bitcoin treasury companies are clearly trying to build lasting investment vehicles. By the end of the year, we could have a bifurcated market where the top Bitcoin companies are modeling themselves after a Warren Buffett, while the bottom rank feels closer to the worst examples of crypto-grift from prior cycles.

Still, Saylor clearly understands that this is the moment to up the game. Fresh off the stage at the conference, he tweeted at Rogan, Let's talk about Bitcoin. The tweet got 18,000 likes and was by far the most popular response to a leading fan account asking about future guests. Now, of course, the other big piece of news for Bitcoin Treasury companies was that the Trump Media Group had closed their gigantic funding round to buy Bitcoin. The Truth Social Parent Company raised around $2.5 billion from a combination equity

and convertible debt sale. This fundraising was only announced last Tuesday and is the companies for first step in pursuing the Michael Saler Playbook. The success of the deal suggests there's a significant amount of capital still looking to get into these kinds of deals, especially if they have a marquee name that's already publicly traded. The company netted $2.3 billion from the fundraise to put into the Bitcoin market. CEO and Chairman Devin Nunes said, Trump Media is focused on acquiring great assets and this deal will give us the financial freedom to implement the rest of our strategies. It means the company will have more than $3 billion in liquid assets and our shareholders will have

exposure to Bitcoin. The deal positions Trump media for the kind of rapid expansion we've always envisioned, and we look forward to advancing even further through the America First economy. Reinforcing just how big the deal was, the company said in a press release that this was, quote, one of the largest Bitcoin Treasury deals for any public company. And would position Trump media to become, quote, one of the top Bitcoin holders among publicly traded U.S. firms with one of the most comprehensive Bitcoin Treasury strategies. Now, with the Bitcoin Treasury strategy catching fire, it is reasonable to question where the funding is coming from and how sustainable the trend really is. It's pretty clear at this point that market participants are willing to fund Sailor and the handful of larger plays that have made big

headlines this year. The typical terms of micro-strategy's convertible debt is a 35% premium to the current stock price. This makes the trade extremely attractive to bond traders without needing to tap Bitcoin native capital. The 50th micro strategy clone, of course, doesn't have that kind of scale or access to capital, so they seem to be tapping the crypto-VCs to fund their strategies. The play seems to be reasonably short term, with most of the upside achieved as the strategy gets set up and rolling. A key example is Metaplanet, which started at zero in December and is now accumulated around 800 million in Bitcoin. They added 95% in Bitcoin terms during Q1 and another 48% in Q2. Over night on Sunday, they added another 14% in a single trade with a $115 million

purchase, demonstrating just how much capital is still flowing. The rapid pace of growth has led the company to add more than a four times multiple of their Bitcoin holdings, a metric known as MNAV. Robbie Kaza, partner in CIO at Erington Capital, said, The Treasury strategies are inherently reflexive. The higher their MNAV valuation sustains at levels far greater than one, the more acceleration or Bitcoin yield, a strategy calls it, they generate when they raise capital to buy the specific treasury asset. Essentially, Kaza is pointing out that Metaplanet can currently sell stock and buy four

times as much Bitcoin with the proceeds. That means the existing holders aren't diluted in Bitcoin terms. Rob Haddock, General Partner at Dragonfly, said, For now, investors and issuers alike believe that these companies are relatively risk-free investments. Until that stops, they will continue to pop up and get funded. It's extremely similar to the grayscale Bitcoin trust trades that we saw a few years ago, which eventually blew up some funds, except in a much more liquid manner and with more retail exposure. End quote.

Until the ETFs were approved, GBTC was one of the only ways to get exposure to Bitcoin in stock trading and retirement accounts. This caused GBTC to trade at a huge premium to Bitcoin, above 35% and December. December of 2020. Then in 2021, the premium flipped to a deep discount, and the trading firms became much more interested. They could sell Bitcoin and buy GBTC for a 10% discount, knowing that the discount would close once the ETF conversion was approved. This trade could also be levered up with many lenders accepting GBT's shares as collateral. That setup has echoes to the Bitcoin Treasury company play, but it isn't exactly the same. If MNAV goes negative, the company simply lose access to capital markets for non-dilutive share issuance. They can sustain that

condition as long as they can still refinance any debt that comes due. The main similarity is that there's a significant amount of leverage being built. We can see the leverage in the Bitcoin companies themselves, with micro strategy currently targeting 1.25X and Metaplanet sitting at around 1.1x. In other words, nothing at all alarming so far. Then again, we don't know how much leverage is building up in the inherently opaque investment firms that are investing in these strategies, especially when it comes to the new companies just joining the fray.

And, as Haddock points out, the exit ramp goes straight into public markets and retail traders. Today's episode of The Breakdown is brought to you exclusively by Grayscale. 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 diversify to thematic exposure to crypto and the broader crypto industry. They have long been innovators at the intersection of TradFi and Crypto,

and one of the benefits for a lot of us is that Grayscale products are available right through your existing brokerage or 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. While the GBTC trade blowing up was devastating for the crypto industry, it had no meaningful connection to public markets.

That doesn't seem like it will be the case for the drivers of this cycle's potential Bitcoin bubble. Bitcoin evangelist Max Kaiser is starting to get nervous, tweeting, The micro strategy clones have not been tested in a bare market. Sailor never sold and just kept buying even when his Bitcoin position was underwater. It's foolish to think the new Bitcoin Treasury micro strategy clones will have the same discipline. And importantly, to a certain extent, it's not even about discipline. It's going to be about for selling when the debt comes due and capital markets are slammed shut for refinancing. The reflexivity runs in both directions, with dragonflies had it commenting, in the case of convertibles, they will massively dilute shareholders

in any case where there has to be forced liquidations. But that's not where we are right now. The trend is hot and the VCs are still piling in. Pantera GP Cosmo Jang is convinced the MNAV premium will persist as long as these companies can keep growing their Bitcoin treasuries. He said, with that conviction, I started to look for asymmetric opportunities to capitalize on the digital asset treasury trend to generate outsized return for our limited partners. Pantera has placed three venture bets on this trend, the Jack Mahler's led and tetherbacked to 21 capital, along with bets on the strategy being replicable, with, with Solana and Ethereum.

Quinn Ho, the head of venture investment at GSR, likes the Altcoin plays better due to staking, discounts on locked tokens, and defy yield strategies. He said, Altcoin treasuries can generate compounding returns in ways that Bitcoin can't. However, the underlying token must have sufficient liquidity in market cap to support a scalable and responsible public company treasury strategy. GSR has placed two All-Coin Treasury bets, and Ho said, We're currently working with a couple of others.

Kaza of Arrington Capital is also placing Altcoin bets due to the increased volatility, stating, the convertible debt markets pay more for higher realized volatility, and thus effectively lower the cost of capital for these strategies. Not everyone convinced, however, with companies like Strobe Ventures, formerly known as block tower, as well as Dragonfly, who I've quoted a couple of times sitting this one out. Dragonfly's Haddock said, these do not fit within our investment thesis, and in most cases, I believe, are simply a speculative trade on the sustainability of the premium continuing to exist for long enough for investors to trade out of them. In a tweet, he added that these are, quote, clearly just point in time solutions

that have no reason to exist over any reasonably mid-to-long-term horizon. That's likely referring mostly to the new all-coin vehicles, which will benefit from the lack of an ETF in the short term. Thomas Colcanus, the managing partner of Strove Ventures, said, we hope not to see any blow-ups. But when a trade at a premium becomes too crowded, we have to acknowledge the risks. Too much leverage, poor quality assets, where there is insufficient institutional demand, over-marketing, it's easy to see these things go wrong and be the cycles Luna or GBT. This will die a relatively quick death. There will be another crypto bear market, whether it starts tomorrow or in five years. I expect it will be similar to the

dot-com bubble burst, where most companies fail and the survivors go on to enjoy significant success. And ultimately, that's kind of the kicker here. Once you get past the hype and the gigantic amount of capital flowing into the segment, the bet is about management. Strong management teams will be able to structure their debt properly and will play for the long game, holding forever. But there's already a consensus that many will get out over their skis and collapse during any downturn. We're still quite early in this trend, so no one is expecting a problem in the short term. The market can clearly sustain several micro-strategy clones while Bitcoin is running hot. However, the addition of all coin strategies and an increasingly crowded trade makes it all seem

to most to be fairly unsustainable. Now, one last one, talking about the variety of opportunities that are open to investors these days. In their latest piece of guidance, the SEC staff have stated that staking activities are not securities transactions. During the crypto crackdown at 2023, the SEC included staking in their lawsuits against multiple exchanges. Those cases have now all been dismissed with the SEC dropping their lawsuit against Binance late

last week. The new guidance was very clear that none of the forms of staking are subject to SEC registration. This includes self-staking, self-custodial staking using third-party services, and fully custodial staking arrangements. The legal logic is that staking providers aren't providing an investment opportunity under the Howie test. They're providing technical services that allow customers to access that investment. Alison Mangiero, head of staking policy at the Crypto Council for Innovation, called it a major step forward, saying, the SEC has now recognized what we've long argued. Staking is a core part of how modern blockchains operate, not an investment contract. Rebecca Reddick, the chief legal officer of Gito Labs, suggested this guidance clears the way for staking

to be included in crypto ETFs. Separately, in an appearance at the Bitcoin Conference, Commissioner Hester Perce, discussed some of the thorny issues to come in regulation. She said, most crypto assets as we see them today are probably not themselves securities. That doesn't mean you can't sell a token that is not itself a security in a transaction that is a securities transaction. That is where we really need to provide some guidance. Now, if you're wondering what the heck that means, basically following the ripple case and change of leadership at the SEC, we have clarity that most normal crypto assets don't fit the security's definition when traded on the open market. But direct sales to venture firms often do have registration requirements

that are still far from clear. Most token offerings use some form of exemption, but we don't have a clear pathway to register an ICO in the U.S. Aside from token sales, this is going to be critically important as tokenization ramps up. First said she expects many more tokens that fit the security's definition to come on chain, things like tokenized stocks and bonds. For those to truly work, there needs to be a legal framework to offer them as native assets rather than a tokenized representation. Above all, Perce reinforced the ethos of this SEC, stating that the goal is to create a, quote, good environment for the legitimate actors and a bad environment for the bad actors. However, speaking about the frequent call to ban altcoin, she added that it's, quote,

really important for us to maintain an environment in which people are free to make their own choices and then bear the consequences of those decisions. I think that's what has made this country what it is, giving people the choice to live their own lives. So friends, that's the story. Bitcoin Treasuries remain the big theme. Clear regulatory guidance remains the big pursuit. For now though, that is going to do it for today's breakdown. Appreciate you listening as always, and until next time, be safe and take care of each other. Peace.