In a recent podcast episode, Jack Mallers, the CEO of XXI Capital, stirred the Bitcoin treasury landscape by declaring that his firm would be moving away from the Bitcoin-per-share metric that has traditionally dominated the sector. This announcement comes at a time of significant scrutiny for companies involved in Bitcoin treasury strategies, particularly aimed at rival company Strategy, led by Michael Saylor, which has recently engaged in dilutive stock issuance.
Mallers expressed the belief that the market is increasingly seeking a Bitcoin equity model that does not necessitate shareholder dilution for financing Bitcoin acquisitions. The backdrop of his comments is particularly noteworthy, as Strategy had just raised $2.1 billion to purchase more Bitcoin, predominantly through dilutive means—86% of this amount was sourced from issuing additional common stock. This approach, which Saylor has championed, has found itself facing criticism amid a challenging environment where nearly 40% of Bitcoin treasury firms are trading below their net asset value and over 60% have made Bitcoin purchases at prices higher than current valuations.
Currently, XXI Capital stands as the third largest public holder of Bitcoin, with approximately 43,514 BTC valued around $3.8 billion. The firm has garnered financial backing from notable entities, including Cantor Fitzgerald, Tether, and Japan-based SoftBank. The shift away from the Bitcoin-per-share metric is significant; traditionally, this measurement has represented how much Bitcoin each share of a treasury holds. When companies opt to issue new shares to fund additional Bitcoin purchases, existing shareholders effectively see their individual stakes diluted.
Mallers didn’t make direct mentions but clearly aimed his remarks at Strategy when he remarked, “We’ve seen certain Bitcoin treasury companies have to dilute shareholders to finance themselves.” This commentary reflects frustration within the market regarding the necessity for companies to sell Bitcoin to maintain liquidity.
The timing of Mallers’ statements coincided with Strategy’s announcement of raising funds, which resulted in an 8% decline in its stock price and a drastic 62% fall over a six-month period. On the other hand, Mallers has asserted that XXI Capital’s strategy will focus on optimizing exposure to Bitcoin while generating cash flow without diluting current shareholders. However, he refrained from detailing specific plans, indicating that more information will be shared “when the timing is right.”
This departure from Bitcoin-per-share metrics raises eyebrows considering XXI Capital’s own challenges; the company’s stock has seen a stark decline of over 70% in the previous six months, painting a picture that is arguably worse than Strategy’s performance. Furthermore, despite criticisms directed at competitors, XXI has yet to launch any cash-generating business nearly nine months after initial promises.
The evolving landscape of Bitcoin treasuries signifies a critical moment of reflection and strategizing for companies involved in this unique asset class, with leaders like Mallers pushing for a reevaluation of traditional metrics and methods.
