Strive Asset Management has made headlines with its acquisition of Semler Scientific in an all-stock transaction, marking a significant milestone in the realm of Digital Asset Treasuries (DATs). This merger, the first of its kind involving two companies that hold bitcoin, consolidates over 10,900 BTC under the newly formed entity, which is poised to enhance its net asset value (NAV) per share—a crucial metric for investors in the cryptocurrency treasury space.
However, the deal has also sparked discussions regarding the valuation methodologies employed by investors in bitcoin treasury firms. Greg Cipolaro, Global Head of Research at NYDIG, expressed concerns in a recent note about the prevalent use of the “mNAV” metric, which calculates market capitalization in relation to the amount of cryptocurrency owned. NYDIG advocates for the elimination of this metric from industry reporting, citing its potential for misleading interpretations.
Cipolaro highlighted that mNAV does not take into consideration the operating businesses or supplemental assets that are typically associated with bitcoin treasury firms. Most of these companies engage in various operations that contribute value beyond their cryptocurrency holdings. Furthermore, NYDIG pointed out a critical flaw in mNAV regarding its use of “assumed shares outstanding.” This metric may include convertible debt that has not met its conversion requirements, potentially misrepresenting the actual financial obligations of a DAT. The firm noted that holders of convertible debt tend to demand cash rather than shares, adding a layer of complexity that could diminish a company’s financial stability and incentivize riskier equity volatility strategies within DATs.
With a collective holding of over 1 million BTC among publicly traded bitcoin treasury firms, the current market dynamics suggest that many companies are now trading below their mNAV values. This trend could indicate that further consolidation and acquisition activity in the sector may be on the horizon as firms seek to enhance their asset valuations in a challenging market landscape.
