Digital Asset Treasury Companies Struggle with Compressing Premiums

The publicly traded digital asset treasury companies that have been using their balance sheets to hold cryptocurrencies as a core strategy are facing significant challenges. The model, which was pioneered by companies like Strategy (formerly MicroStrategy) and has attracted staggering capital of at least $86 billion for token acquisitions in 2025, is no longer viable due to compressing premium-to-NAV multiples.

The metric that matters here is the market NAV multiple (mNAV). When mNAV is above 1.0, a company's market cap exceeds the value of its crypto stash, resulting in a premium baked into the stock. This premium is what makes each new share sale accretive, allowing companies to buy more tokens than they would if they just issued shares at face value.

However, when mNAV compresses or even turns negative, as it has for some companies like Bitmine and SharpLink Gaming, issuing new shares to buy more tokens becomes destructive to existing shareholders. The dilution problem compounds quickly, putting downward pressure on stock prices, which in turn shrinks the premium.

As a result, investors who used these stocks as a proxy for Bitcoin exposure are reevaluating their strategy. With traditional funding mechanisms at risk of breaking down during market downturns and regulatory headwinds adding to operational costs, the case for owning these stocks over spot Bitcoin ETFs weakens considerably.