This article explains a financial strategy. It is not investment advice and does not recommend buying or avoiding any asset.
A corporate treasury is the pool of cash and easily sold assets a company keeps on hand to run the business, pay its debts and weather a downturn. Traditionally that means bank deposits, money-market funds and short-term government bonds. A "bitcoin treasury" company replaces some — or most — of that conventional reserve with bitcoin.
The idea went mainstream after the firm now called Strategy (formerly MicroStrategy) made its first bitcoin purchase in 2020, and it has since drawn dozens of imitators. The late-June 2026 sell-off, which knocked bitcoin down roughly 20% from its May peak, has put the whole model under a harsh light — and made its mechanics worth understanding.
Why companies do it
Supporters offer a few arguments. The first is an inflation hedge: the claim that bitcoin's fixed supply — only 21 million coins will ever exist — makes it a better long-term store of value than dollars, which central banks can create at will. The second is diversification: because bitcoin's price is driven by different forces than corporate earnings or bond yields, its swings need not track the rest of a company's business. The third is investor demand: companies have found that some equity investors will pay up for regulated, exchange-listed exposure to bitcoin, sparing themselves the trouble of holding crypto directly.
For firms in economies with weakening currencies, the logic can be sharper still. Japan's Metaplanet, which holds tens of thousands of bitcoin, frames its strategy explicitly as a hedge against a falling yen, The Block notes.
The Strategy model: debt and dilution
What makes Strategy's approach distinctive — and divisive — is that it does not merely park spare cash in bitcoin. It actively raises money to buy more, using two tools.
Convertible debt is a bond that pays little or no interest but lets the lender convert the loan into company stock if the share price climbs above a set level. Because lenders get that upside, they accept a low rate, letting the company borrow cheaply — and spend the proceeds on bitcoin.
At-the-market stock sales let a company drip newly created shares into the open market at prevailing prices. The company pockets the cash and buys still more bitcoin.
When bitcoin is rising, this creates a self-reinforcing loop: a higher bitcoin price lifts the stock, which makes issuing new shares more lucrative, which funds more bitcoin purchases, which draws in more investors who want exposure — pushing the stock higher again. The catch is that the loop can run in reverse just as easily.
Understanding mNAV
The key gauge for these companies is mNAV — the market-to-net-asset-value ratio. In plain terms, it compares what the market thinks the company is worth to what its bitcoin is actually worth.
Net asset value, or NAV, is the market price of all the bitcoin on the books minus the company's liabilities — its debt, its obligations to preferred shareholders, anything it owes. The mNAV ratio is the company's total market value divided by that figure.
When mNAV is above 1.0 — say, 2.0 — investors are paying two dollars for every dollar of bitcoin the company effectively controls. That premium can make sense if the firm keeps growing its bitcoin per share faster than new share sales dilute existing holders. When mNAV falls below 1.0, the market is saying the whole enterprise is worth less than the bitcoin it holds — usually a sign investors fear the liabilities, or the risk of a forced sale, outweigh the assets.
The premium collapses
For most of its history as a bitcoin treasury, Strategy traded at a hefty premium to its bitcoin NAV — at times two or three times over. That premium was the market's vote of confidence.
In late June 2026, it vanished. Strategy's enterprise mNAV — a stricter version that counts all capital obligations, including preferred shares and debt — dipped below 1.0 for the first time, The Block reported. Its common stock fell to around $82, roughly half its value a month earlier, and its preferred shares (ticker STRC), designed to trade around a $100 face value, slid to about $71 — a 26% discount. The trigger was bitcoin itself, which fell from a 2026 peak near $126,000 to around $59,000.
Paper losses, real obligations
A paper loss — also called an unrealized loss — is a drop in the value of an asset a company still holds. No money has actually left, because nothing has been sold. But under U.S. accounting rules that took effect at the end of 2024, companies must now mark their bitcoin to market value every quarter, so a paper loss flows straight into reported earnings even when no coins change hands.
The more pressing issue is cash. Strategy owes roughly $1.2 billion a year in dividends on its preferred shares while holding about $1.4 billion in cash, according to The Block's analysis — a thin margin. The fear, as Bitwise's Matt Hougan told Fortune, is that pressure on the preferred shares "is going to force Strategy to sell Bitcoin to raise cash" — a sale at depressed prices that would lock in losses and could drag bitcoin lower still.
The case for and against
Supporters argue bitcoin's long record of recovering from steep drawdowns rewards patience, and that the accumulation model has created enormous value since 2020. Critics counter that it depends on a perpetually rising or recovering price: when bitcoin drops hard, leverage that magnified the gains magnifies the losses, while preferred dividends and debts come due regardless. As The Block puts it, an all-in bitcoin allocation may suit a company whose entire identity is bitcoin, but "would not suit most operating businesses."
The copycat wave adds a final wrinkle. Several firms that adopted the playbook during the boom are now unwinding positions into a falling market, Fortune reported — potentially adding selling pressure at the worst possible moment. For anyone trying to read one of these companies, the lesson of mid-2026 is that the bitcoin on the balance sheet and the debt behind it have to be weighed together, never apart.
