Bitcoin treasury companies are bleeding as Bitcoin’s price flutters around $89,000.
Metaplanet, one of the largest Bitcoin treasury companies after Strategy, has swung from over $600 million in unrealised profits in early October to around $530 million in unrealised losses as of December 1, according to data from Galaxy Research.
The collapse mirrors Bitcoin’s 25% price drop from its October highs. With Bitcoin trading around $89,000, treasury companies that accumulated aggressively near the peak are now deeply underwater.
Touted as the next wave of corporate finance, the digital asset treasury model is breaking apart. Companies that raised capital to buy Bitcoin over $100,000 — thinking the asset would never drop below six-figures — are now sitting on massive unrealised losses while their equity premiums have simultaneously evaporated.
Shares for these companies have also plunged in value. Already in September, many treasuries were watching their stock prices lose value, sometimes at a faster pace than Bitcoin.
Billions in unrealised losses
Metaplanet, the hotel operator turned Bitcoin treasury, has an average cost that sits at around $108,000 per Bitcoin. With Bitcoin at $89,000, the company is underwater by nearly $17,000 per coin across its 30,823 Bitcoin balance sheet.
Nakamoto has been hit particularly hard. Not only does the company hold 5,398 Bitcoin at an average cost of around $118,000 — that puts the company’s unrealised losses at over $180 million — but it has also watched its share prices collapse more than 95%.
And then there’s Semler Scientific, which holds 5,048 Bitcoin at an average cost of about $95,000, leaving it with over $50 million in unrealised losses.
Only Strategy remains profitable, holding 650,000 Bitcoin at a $74,436 average cost. But even Strategy’s unrealised gains have collapsed from $28.4 billion in July to $6.9 billion today.
Premiums compress
But that’s not all, for equity premiums tell an even uglier story.
In July, when Bitcoin traded near $118,000, treasury companies commanded massive premiums to their Bitcoin holdings. Metaplanet traded at 237% of its Bitcoin market-to-net-asset value, while Strategy traded at a 79% premium.
Today, those premiums have vanished or inverted entirely.
Strategy now trades at a 15.5% discount to its Bitcoin NAV — the first time the company has traded below the value of its holdings since transforming from a software provider into a treasury company.
Metaplanet’s premium collapsed to just 6% from 237%, while Scientific trades at a 29% discount, and Nakamoto has a discount of over 50%.
The compression also reflects a complete loss of confidence in the treasury model.
When Bitcoin was rallying, investors paid premiums betting these companies would continue accumulating and Bitcoin would continue to appreciate. Now that Bitcoin has fallen and these companies are underwater, investors are pricing in distress.
Moreover, treasuries have also slowed down their shopping sprees. In November, the amount of Bitcoin bought by these companies dropped to its lowest level this year, according to BitcoinTreasuries.net.
