Bitcoin treasuries are having a moment, but the buzz is hiding how insiders are quietly cashing in while retail investors foot the bill, according to some market stakeholders.
Rob Hadick, general partner at crypto venture capital firm Dragonfly, reckons that the sudden wave of companies launching corporate Bitcoin vehicles is a sign of trouble, not triumph.
“The crypto treasury trend is complicated,” Hadick said in a July 21 interview with Coinage Media. “I got six calls about new treasury vehicles over the weekend. That tells you the froth.”
And it’s precisely that fervour that’s creating distorted incentives, he argued.
Bitcoin treasury companies have just one overarching business model and it’s to raise money, buy Bitcoin, and hope the stock trades at a premium.
It’s a playbook popularised by Michael Saylor. The stock of his software company, Strategy, has soared more than tenfold since it began swapping cash for crypto at the end of 2020.
That success has triggered crypto’s latest gold rush — drawing in everyone from hotel chains to US President Donald Trump’s Trump Media to stock up on Bitcoin.
More than 150 public companies now hold Bitcoin on their balance sheets, with 24 new firms joining the trend in the past 30 days.
Buying a dollar for $1.20
It’s not just the volume of deals — it’s also how they’re structured.
Many of these vehicles include “promotes,” the cut taken by asset managers or early investors before any gains reach shareholders, Hadick said.
“Traditionally, a promote is 10%,” he said. “I’ve seen some now where they’re up to 20% or more. That’s dilution — you’re paying $1.20 for $1 of Bitcoin.”
Even if Bitcoin performs well, investors could still lag because a sizable chunk of the upside is carved out for insiders.
A high promote rewards hype and fundraising over long term value creation, because it lets insiders lock in upside before the asset even performs. The more capital they raise, and the more buzz they generate, the more they earn, regardless of whether the Bitcoin bet actually pays off.
Hadick isn’t a fan of the model.
“Some of them look like they’re just meant to extract value,” he said.
Unsustainable valuations
He’s not the only one concerned.
Eliezer Ndinga, head of research at 21.co, says that while Bitcoin treasuries are becoming more common, the quality varies widely.
“Those firms risk unsustainable valuations and won’t trade at significant premiums in the future.”
Famed short seller Jim Chanos, who called Enron’s collapse in 2001, recently said the crypto market is reliving the 2021 SPAC boom — only this time, it’s Bitcoin on the balance sheet instead of blank-check mergers.
“We are seeing SPAC-like 2021 numbers in the Bitcoin treasury market right now,” Chanos said on the Bitcoin Fundamentals podcast last week. “Hundreds and hundreds of millions of dollars a night.”
He’s shorting the premium between Strategy’s stock — the company formerly known as MicroStrategy — and its underlying Bitcoin holdings.
“I believe it’s over 130 companies already — and growing,” he said. “The market can only absorb so much issuance.”
