New Trend of Listed Companies: Analysis of Crypto Assets Reserve Economic Model

Introduction

By mid-2025, an increasing number of listed companies will incorporate Crypto Assets into their asset allocation. According to analysis data, in June 2025 alone, 26 new companies will include Bitcoin in their balance sheets, bringing the total number of companies globally holding BTC to approximately 250.

These companies span multiple industries and regions. Many companies view Bitcoin's limited supply of 21 million as a hedge against inflation and emphasize its low correlation with traditional financial assets. This strategy is quietly going mainstream: as of May 2025, 64 companies registered with the SEC collectively hold approximately 688,000 BTC, accounting for about 3-4% of the total Bitcoin supply. Analysts estimate that over 100-200 companies worldwide have incorporated Crypto Assets into their financial statements.

Crypto Assets Reserve Model

When publicly listed companies allocate part of their balance sheet to Crypto Assets, a core question arises: how did they finance the purchase of these assets? Unlike traditional financial institutions, most companies adopting a crypto treasury strategy do not rely on cash-rich core businesses to support them. The following analysis will primarily use MicroStrategy as an example, as most other companies are actually replicating its model.

main business cash flow

Although theoretically the "healthiest" and least dilutive way is to purchase Crypto Assets through the free cash flow generated by the company's core business, in reality, this approach is almost infeasible. Most companies themselves lack sufficient stable and large-scale cash flow and cannot accumulate a large reserve of BTC, ETH, or SOL without the aid of external financing.

Taking MicroStrategy as a typical example: the company was founded in 1989 and originally focused on business intelligence software, with its main products including HyperIntelligence, AI analytics dashboards, and others. However, these products have only generated limited revenue to date. In fact, MicroStrategy's annual operating cash flow is negative, which is far from the hundreds of billions of dollars it has invested in Bitcoin. Thus, it is clear that MicroStrategy's Crypto Assets treasury strategy has never been based on internal profitability, but rather relies on external capital operations.

A similar situation also occurred at SharpLink Gaming. The company transformed into an Ethereum vault carrier in 2025, purchasing over 280,706 ETH( worth approximately $840 million). Clearly, it could not rely on the revenue from its B2B gaming business to accomplish this operation. SharpLink's capital formation strategy primarily relies on PIPE financing and direct equity issuance, rather than operational revenue.

Capital Market Financing

Among publicly traded companies adopting the encryption vault strategy, the most common and scalable approach is to raise funds through public market financing by issuing stocks or bonds, and using the proceeds to purchase Bitcoin and other crypto assets. This model allows companies to build large-scale encryption vaults without utilizing retained earnings, fully leveraging financial engineering methods from traditional capital markets.

Issuing Stocks: A Traditional Dilutive Financing Case

In most cases, issuing new shares comes with costs. When a company raises funds by issuing additional stocks, two things usually happen:

1. Ownership is diluted: the shareholding ratio of existing shareholders in the company decreases.
2. Earnings per share ( EPS ) decreased: With net profit remaining unchanged, the increase in total share capital led to a reduction in EPS.

These effects usually lead to a decline in stock prices, mainly for two reasons:

• Valuation logic: If the P/E ratio ( remains unchanged while EPS declines, the stock price will also fall.
• Market Psychology: Investors often interpret financing as a sign that a company lacks funds or is in trouble, especially when the raised funds are used for unverified growth plans. Additionally, the supply pressure from a large influx of new stocks into the market can also lower market prices.

)# MicroStrategy's anti-dilution equity model

MicroStrategy is a typical counterexample to the traditional narrative of "equity dilution = harm to shareholders." Since 2020, MicroStrategy has been actively purchasing Bitcoin through equity financing, with its total outstanding shares growing from less than 100 million to over 224 million by the end of 2024.

Despite the dilution of equity, MicroStrategy often outperforms Bitcoin itself. Why? Because MicroStrategy has long been in a state of "market capitalization greater than the net value of its held Bitcoin," which we refer to as mNAV > 1.

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)# Understanding Premium: What is mNAV?

• When mNAV > 1, the market values MicroStrategy higher than the fair market value of its held Bitcoin.

In other words, when investors gain exposure to Bitcoin through MicroStrategy, the price paid per unit is higher than the cost of directly purchasing BTC. This premium reflects the market's confidence in Michael Saylor's capital strategy and may also represent the market's belief that MicroStrategy offers leveraged, actively managed BTC exposure.

Support of traditional financial logic

Although mNAV is a crypto-native valuation metric, the concept of "trading price being higher than the underlying asset value" has long been prevalent in traditional finance.

The main reasons why the company often trades at a price higher than its book value or net assets are as follows:

Discounted Cash Flow ### DCF ( Valuation Method

Investors are concerned with the present value of the company's future cash flows, not just the assets it currently holds.

This valuation method often results in the company's trading price being significantly higher than its book value, especially in the following situations:

• Expected growth in revenue and profit margins
• The company possesses pricing power or a technological/commercial moat.

Profit and Revenue Multiple Valuation Method)EBITDA(

In many high-growth industries, companies often use the P/E) price-to-earnings ratio( or revenue multiples for valuation:

• High-growth software companies may trade at 20-30 times EBITDA multiples;
• Early companies may trade at 50 times revenue or higher even without profits.

MicroStrategy has advantages that Bitcoin itself does not possess: a corporate shell that can access traditional financing channels. As a publicly traded company in the United States, it can issue stocks, bonds, and even preferred shares to raise cash, and it has indeed done so with remarkable results.

Michael Saylor cleverly utilizes this system: he has raised billions of dollars by issuing zero-interest convertible bonds and the recently launched innovative preferred stock products, and has invested all of this funding into Bitcoin.

Investors recognize that MicroStrategy is able to use "other people's money" to purchase Bitcoin on a large scale, and this opportunity is not easily replicable by individual investors. The premium of MicroStrategy "is not related to short-term NAV arbitrage," but rather comes from the market's high trust in its capital acquisition and allocation capabilities.

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)# mNAV > 1 How to achieve anti-dilution

When MicroStrategy's trading price exceeds its net asset value of Bitcoin ###, i.e., mNAV > 1(, the company can:

1. Issue new shares at a premium price
2. Use the raised funds to purchase more Bitcoin ) BTC (
3. Increase total BTC position
4. Promote the synchronized rise of NAV and enterprise value

Even with an increase in circulating shares, the amount of BTC held per share ) BTC/share ( may remain stable or even rise, making the issuance of new shares a anti-dilution operation.

)# What happens if mNAV < 1?

When mNAV < 1, it means that each dollar of MicroStrategy stock represents a BTC market value exceeding one dollar ###, at least on paper (.

From a traditional finance perspective, MicroStrategy is trading at a discount, that is, below its net asset value )NAV(. This poses challenges in capital allocation. If the company were to finance through equity to buy BTC under such circumstances, from a shareholder's perspective, it is essentially buying BTC at a high price, thereby:

• Diluted BTC/share) per share BTC holding(
• and reduce the value of existing shareholders

When MicroStrategy faces a situation where mNAV < 1, it will not be able to continue to maintain that "issue new shares → purchase BTC → increase BTC/share" flywheel effect.

So what options are left at this time?

)# Buy back stocks instead of continuing to buy BTC

When mNAV < 1, repurchasing MicroStrategy shares is a value-enhancing behavior, for reasons including:

• You are repurchasing stocks at a price lower than their intrinsic value in BTC.
• As the number of circulating shares decreases, BTC/share will rise.

Saylor has made it clear: if the mNAV is below 1, the best strategy is to buy back stocks instead of continuing to buy BTC.

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)# Method 1: Issue Preferred Shares

Preferred stock is a type of hybrid security that lies between debt and common stock in a company's capital structure. It typically provides fixed dividends, has no voting rights, and has priority over common stock in profit distribution and liquidation. Unlike debt, preferred stock does not require repayment of principal; unlike common stock, it can provide more predictable income.

MicroStrategy has issued three classes of preferred stock: STRK, STRF, and STRC.

STRF is the most direct tool: it is a non-convertible perpetual preferred stock that pays a fixed cash dividend of 10% annually on a par value of $100. It has no equity conversion options and does not participate in the stock appreciation of MicroStrategy, providing only yield.

The market price of STRF will fluctuate around the following logic:

• If MicroStrategy needs financing, it will issue more STRF, thereby increasing supply and lowering the price.
• If the market demand for returns surges ###, like during periods of low interest rates (, the price of STRF will rise, thereby reducing the effective yield;
• This forms a price self-adjustment mechanism, with the price range usually being narrow ), for example, $80-$100 (, driven by yield demand and supply and demand.

Since STRF is an non-convertible, essentially non-redeemable instrument ) unless tax or capital trigger conditions are met (, its behavior is similar to perpetual bonds, allowing MicroStrategy to repeatedly "buy the dip" in BTC without the need for refinancing.

STRK is similar to STRF, with an annual dividend of 8%, but it adds a key feature: it can be converted into common stock at a 10:1 ratio when the MicroStrategy stock price exceeds $1,000, effectively embedding a deep out-of-the-money call option, providing holders with long-term appreciation opportunities.

STRK is highly attractive to both companies and investors for several reasons:

Asymmetric Upside Opportunity for MicroStrategy Shareholders:

• Each share of STRK is priced at about $85, raising $850 for 10 shares;
• If in the future it converts to 1 share of MicroStrategy, it means the company buys BTC at a cost of $850 currently, but it will only dilute if the MicroStrategy stock price rises above $1,000;
• Therefore, during the MicroStrategy period below $1,000, it is non-dilutive, reflecting the appreciation brought by the previous BTC accumulation even after conversion.

Yield Stability Structure:

• STRK pays a dividend of $2 each quarter, with an annualized amount of $8;
• If the price drops to $50, the yield will rise to 16%, attracting buying support for the price.
• This structure makes STRK behave like a "bond with options": defensive on the downside and participatory on the upside.

Investor Motivation and Conversion Incentives:

• When MicroStrategy's stock price exceeds $1,000, holders are motivated to convert to common stock;
• As MicroStrategy continues to rise ) to $5,000 or $10,000 (, the dividends of STRK become negligible ) with a yield of only about 0.8% (, accelerating the conversion;
• Finally form a natural exit channel, converting temporary financing into a long-term shareholder structure.

MicroStrategy also reserves the right to redeem STRK, with conditions including that the remaining unconverted shares are less than 25% or that there is an occurrence of