Treasury Companies 101: The MicroStrategy Playbook

Welcome back to Old Man New Money, I'm Douglas Borthwick and today we're starting Module 3 of our educational series. We've covered digital securities fundamentals in Module 1, we've covered blockchain basics in Module 2, and now in Module 3 we're diving into one of the most fascinating developments in corporate finance right now, Treasury companies. Companies that are using their corporate balance sheets to accumulate crypto assets, and not just holding a little Bitcoin on the side, I'm talking about publicly traded companies converting hundreds of millions or even billions of dollars of treasury assets into cryptocurrencies.

This started with MicroStrategy, now called Strategy. Back in August of 2020, Michael Saylor announced they were converting their entire corporate treasury into Bitcoin, and Wall Street lost its mind. Analysts called him crazy. Who takes a publicly traded software company and turns it into a Bitcoin whale? Well, fast forward to November of 2025 and over 70 public companies have followed that playbook. It's become an entire asset class. And today, we're going to break down how it works using Strategy as the case study. The original, the pioneer, the company that proved this model could actually work. Here's your 30 second version.

Treasury companies are publicly traded corporations that use capital raises to accumulate cryptocurrency as their primary asset. Strategy, formerly MicroStrategy, holds approximately 641,000 Bitcoin worth over $65 billion at current prices. They raise capital through equity offerings, convertible debt, and preferred stock, then use the proceeds to buy more Bitcoin. The investment thesis is that their financial engineering lets them accumulate Bitcoin per share faster than just buying Bitcoin directly. They measure success through Bitcoin yield, which tracks a percentage increase in Bitcoin per share over time.

This has leveraged Bitcoin exposure through traditional markets. We're at this point where treasury companies are no longer experimental. They're a proven model with real track records, real liquidity, and real institutional adoption. Strategy's market cap is around $70 billion. Their stock trades around $4 billion per day in volume. That's more liquid than most S&P 500 companies, and it's not just Bitcoin anymore. We're now seeing companies build similar models around Ethereum, around Solana, around different crypto assets with completely different business strategies.

So understanding the strategy playbook is critical, because whether you're an investor evaluating these stocks, a CFO considering the strategy for your own company, or just trying to understand where crypto's going, treasury companies are a big piece of the puzzle. Let me take you back to August of 2020. This is when it all started. MicroStrategy had been around since 1989. They were a decent but unremarkable business intelligence software company, selling analytics tools to enterprises, steady but not exciting. Michael Saylor was the founder and CEO, brilliant guy, had built the company from nothing, but the software business was mature.

Truth was slowing, and they had about $500 million sitting in cash on the balance sheet, earning basically 0% interest. In the middle of 2020, we're in the COVID pandemic. The Fed is printing money, inflation fears are rising, and Saylor starts looking at Bitcoin as a treasury reserve asset. No, this wasn't just some whim. He spent months researching it, talking to experts, understanding the technical and regulatory landscape. He became convinced that Bitcoin was superior to cash as a store of value, digital gold, hard cap of 21 million coins. No central bank can print more.

In August of 2020, he announced that MicroStrategy is buying $250 million worth of Bitcoin. This is their treasury reserve, not a speculative trade, a strategic asset allocation. Wall Street flipped out, analysts downgraded the stock, people said he was gambling with shareholder money, that this was reckless, that boards and shareholders would never tolerate this. But here's what happened. Coin went up, and Saylor realized he'd stumbled onto something bigger than just holding Bitcoin. He realized he could use the public markets as a capital-raising machine to accumulate more Bitcoin. And here's how the model actually works.

This is critical to understand. Strategy doesn't just buy Bitcoin with cash sitting on their balance sheet. They actively raise capital specifically to buy more Bitcoin, and they've gotten incredibly sophisticated at this. They issue new shares of common stock through ATM offerings. That's at-the-market offerings, where they sell shares to gradually into the market. They raise hundreds of millions or billions this way without crashing the stock price. They issue convertible debt. These are bonds that pay low interest rates but can convert into stock later. Researchers accept lower yields because they get the upside optionality of conversion.

Strategy gets cheap capital to buy Bitcoin. The issue preferred stock with different tickers, STRK, STRF, STRD, STRC, and the newest STRE. Each one has different risk-return characteristics, different yields, different conversion terms, different priorities in the capital structure. They've created an entire ecosystem of securities that all feed capital into Bitcoin accumulation. This is financial engineering at its finest. They've turned themselves into a Bitcoin accumulation machine powered by the public capital markets. As of November 2025, they hold approximately 641,000 Bitcoin.

They've spent $47.9 billion acquiring it at an average price around $74,000 per coin. That's about 3% of Bitcoin's entire 21 million coin supply. Think about that. A single public company controls 3% of all Bitcoin that will ever exist. Now, strategy doesn't measure success the way normal companies do. They don't care about revenue growth or earnings per share from their software business. That's become almost irrelevant. They care about one metric, Bitcoin yield. Bitcoin yield is a percentage increase in Bitcoin per share over a given time period.

If they started the quarter with 0.01 Bitcoin per share and ended with 0.011 Bitcoin per share, that's a 10% Bitcoin yield. Now, why does this matter? Because if you just bought Bitcoin directly, your Bitcoin per Bitcoin is always one. You can't increase your Bitcoin unless you buy more with new money. But strategy's using financial engineering to increase their Bitcoin per share without diluting shareholders proportionally. They're issuing debt and preferred stock that doesn't dilute common shareholders. They're issuing convertible debt at premiums to current stock prices so conversion is accretive.

Their time in capital raises when their stock trades at big premiums to net asset value. As of late October 2025, they've achieved 26.1% Bitcoin yield year to date. They've set their target at 30% for the full year, 30%. That means they're planning to end the year with 30% more Bitcoin per share than they started with purely through financial engineering. If they hit that target and Bitcoin itself appreciates, you get the double whammy, more Bitcoin per share plus Bitcoin price appreciation. So why would someone buy strategy stock instead of just buying Bitcoin directly? There are several reasons and I think they're important to understand.

First, leverage exposure through a traditional brokerage account. You don't need to set up a crypto exchange account. You don't need to manage private keys. You don't need custody solutions. You just buy MSTR in your regular stock account. For a lot of traditional investors, especially older ones or institutions, this is huge. Second, the NAV premium. Strategy has historically traded at a premium to their net asset value. So as of November 2025, this premium has compressed significantly. The stock is trading around $240 with Bitcoin at around $101,000.

The premium varies based on market sentiment, but it's much lower than the 40 to 50% premiums we saw in the bull run. Third, the financial engineering creates leveraged Bitcoin exposure. When Bitcoin goes up 1%, MSTR often moves more aggressively. The stock has historically had a beta around three to four times Bitcoin's moves. That means it can move three to four times as much as Bitcoin in either direction. If you're bullish on Bitcoin and want magnified exposure, strategy delivers that. Fourth, institutional accessibility. Pension funds and diamonds mutual funds, they often can't or won't buy Bitcoin directly.

Regulatory restrictions, custody concerns, board policies. But they can buy strategy stock. It's a NASDAQ listed company with traditional SEC reporting. That opens up huge pools of capital that otherwise can't access Bitcoin. And fifth, liquidity. Strategy trades around $4 billion a day. That's serious institutional grade liquidity. You can move large positions without slippage. Try buying or selling a billion dollars of Bitcoin on exchanges. You'll move the market. With MSTR, you can do it more seamlessly. Let's talk about how to value this thing because it's not straightforward. At the most basic level, you can calculate net asset value.

Take their Bitcoin holdings at current market price. Subtract their debt, divide by shares outstanding. That gives you NAB per share. As of today, November 2025, their NAB is calculated roughly as follows. 641,000 Bitcoin times $101,000 equals approximately $65 billion in Bitcoin value. Subtract about $8 billion in debt and you're at $57 billion in net asset value. Divide by approximately 287 million shares outstanding and you'll get around $200 per share in NAB. But the stock trades around $240. That's only about a 20% premium to NAB.

Compare that to the 40 to 50% premiums we saw earlier in 2025 and you can see the compression that's happened. Why does any premium persist? Well, you're paying for future Bitcoin yield. The market is betting that management will continue increasing Bitcoin per share through accretive capital raises. If they hit their 30% annual Bitcoin yield target, that premium might actually be cheap. You're paying for optionality. They have multiple levers to pull, more equity raises, more convertible debt, more preferred stock, new financial products. The optionality is valued. You're paying for the brand and first mover advantage.

They're the most well-known Bitcoin treasury company. That brand has value. You're paying for liquidity. That $4 billion in daily volume means institutions can actually deploy capital. That liquidity commands a premium. Now this premium can compress and it has dramatically in late 2025. The stock hit a 52 week high of $543 in November, 2024, but as of November, 2025, it's trading near its 52 week low around $220 to $240. If the NAB premium shrinks from 20% to zero or goes negative, you can lose money even if Bitcoin goes up. That's a real risk.

But historically, some premium has persisted and as long as management delivers on Bitcoin yield targets, the market seems willing to pay it. Let's talk about the debt because this is important to understand the risk profile. As of November, 2025, strategy has about $8.2 billion in debt. That sounds scary, right? But here's the thing. That debt is secured by Bitcoin holdings worth over $65 billion at current prices. It's approximately eight times over collateralized at Bitcoin's current price of $101,000.

The convertible debt they've issued has conversion prices way above the current stock price, meaning the bonds won't convert unless the stock appreciates significantly. And even if they do convert, the conversions are structured to be accruative to Bitcoin per share. The debt has long maturities. They're not facing near term refinancing risk. They've got time for Bitcoin to appreciate and for them to generate cash flow or raise capital to pay it off. And here's the kicker, if Bitcoin keeps going up, the debt becomes less relevant as a percentage of their total balance sheet.

The equity value grows so much faster than the debt burden that leverage actually decreases over time. And this is why Saylor keeps saying Bitcoin is the best collateral in the world. It's liquid 24/7, has no counterparty risk, and it can't necessarily go to zero overnight like a company stock. It's globally accessible. Now in a severe bear market, this leverage becomes a problem. Bitcoin recently dropped from its October high of 120, probably dipping below that psychological level for the first time since June. If Bitcoin crashed 70 or 80% from current levels, that eight times over collateralization shrinks dramatically.

Debt covenants could kick in. They might be forced to sell Bitcoin at the worst possible time. Additionally, the annual carrying costs are significant, as of late October of 2025, the company faces approximately $689 million in annual interest payments and preferred stock dividends. This cost keeps rising with each new preferred stock issuance. But the bull cases that Bitcoin's long-term trend is up, and as long as that continues, the debt structure is brilliantly designed. Here's something funny. Nobody still technically runs a software business. They sell business intelligence tools, analytics platforms.

It's a real business with real revenue, but nobody cares. When the company reports earnings, analysts immediately skip to the Bitcoin numbers. How much did they buy this quarter? What's their Bitcoin yield? What's the NAV? The software division reported about $129 million in revenue for the third quarter of 2025. Over the first nine months of 2025, software revenues were only about $354 million. Meanwhile, the company reported billions in operating income from the appreciation of their Bitcoin holdings. The software division has become almost irrelevant to the stock price. It's basically just a vehicle for the Bitcoin treasury.

There's talk that they might eventually spin off or sell the software business, just become a pure play Bitcoin treasury company. Though the software division does generate some cashflow, they can be used to buy more Bitcoin, so there's an argument for keeping it. But the point is, this is not a technology stock anymore. It's a Bitcoin stock, and everyone knows it. In February of 2025, the company rebranded from microstrategy to just strategy. The ticker symbol staged MSTR for the common stock, but the name changed, and they finalized the legal name change in August of 2025. This was symbolic.

They were acknowledging what everyone already knew. This isn't microstrategy, the software company anymore. This is strategy, the Bitcoin accumulation company. The rebrand made official what the market had already priced in. This is a financial strategy company, and the strategy is Bitcoin. And here's what's fascinating, strategy success has spawned an entire industry. As of November of 2025, over 70 public companies have adopted some version of a Bitcoin treasury strategy. Not all is as aggressive a strategy, but still meaningful allocations.

You've got companies like Marathon Digital, Riot Platforms, other Bitcoin miners putting their mined coins on the balance sheet instead of selling them immediately. You've got companies like Galaxy Digital, Coinbase, crypto-native businesses that hold significant Bitcoin treasuries. You've got traditional companies experimenting with small allocations. Tesla famously bought and then partially sold, Block, formerly Squareholds Bitcoin, MicroVentures, and Metoplanet in Japan. The model that strategy pioneered has become accepted. It's no longer crazy to put Bitcoin on your corporate balance sheet.

It's becoming almost mainstream in certain industries. Let me give you some numbers to understand the scale. Strategy holds approximately 641,000 Bitcoin at $101,000 per coin. That's approximately $65 billion. They've achieved approximately 160% return on their Bitcoin investment since its inception. Not counting any NAV premium, just the difference between their average cost of $74,000 per Bitcoin and the current price. Their stock has historically shown a beta of three to four times Bitcoin's moves. When Bitcoin moves 1%, MSTR can move 3% to 4% on average, though this relationship varies with market conditions.

Daily trading volumes around $4 billion. That makes it one of the most liquid stocks in the entire market. They've raised over $7 billion in capital just in 2025 so far, and they keep going back to the markets because demand is there. The NAV premium has compressed significantly from the 30% to 40% we saw earlier in 2025 to around 20% or less as of November. This compression reflects changing market sentiment and concerns about dilution from constant capital raises. Now let's talk about risks because this is not a free lunch. Bitcoin price risk is obvious. If Bitcoin crashes, MSTR crashes harder because of the leverage and market sentiment.

A 50% drop in Bitcoin could mean a 70% or 80% drop in MSTR. We saw this dynamic play out in late 2025 when Bitcoin dropped from $126,000 to briefly below $100,000 and MSTR fell from $543 to around $240, a decline of over 55% when Bitcoin fell less than 25% from its peak. NAV premium compression is real and happening right now. The premium that was 40% to 50% earlier in 2025 has compressed to around 20% or potentially lower. If the market decides they don't want to pay any premium anymore, the stock can fall even if Bitcoin stays flat or goes up. Dilution risk exists. They're constantly issuing new shares to buy Bitcoin.

They completed their $21 billion ATM program in May of 2025 and immediately announced another $21 billion program. If the capital raises aren't accretive, shareholders get diluted. The share count has grown significantly from around 230 million shares to over 287 million shares. Debt and dividend cost risk. As of late October 2025, the company faces approximately $689 million in annual interest and preferred dividend payments. This cost grows with each new preferred stock issuance. They need to service this debt without selling Bitcoin, which means continued dilutive capital raises or using software revenue.

Debt covenant risk in a bear market. While Bitcoin at $100,000 provides comfortable over collateralization, if Bitcoin falls to $40,000 or $50,000, that $8 billion in debt becomes much more concerning. Forced selling could occur at the worst possible time. Monetary risk is always present, changes to Bitcoin regulation, taxation, custody requirements, any of this could impact the business model. There's also ongoing debate about whether strategy's capital raising model represents fair value creation or is it unsustainable. Key person risker and Michael Saylor. He is the strategy. If something happened to him, confidence would evaporate quickly.

Though they've built a deep team with Fong Lee as CEO, Saylor remains a visionary and the face as executive chairman. Execution risk on achieving Bitcoin yield targets. They achieve 26% through October and are targeting 30% for the full year. If they can continue increasing Bitcoin per share at these rates, the premium will compress further and the stock will underperform Bitcoin. Market sentiment risk. As of November 2025, we're seeing real skepticism about the model. Some analysts have called it unsustainable. Your interest has increased the stock received a junk credit rating despite its Bitcoin holdings.

These are warning signs that sentiment can shift. These are real risks. This is not a safe investment. The volatility we've seen in late 2025 proves that, but that's the trade off for the leveraged exposure. What should you do right now? Understand the difference between buying Bitcoin and buying MSTR. They're correlated but not identical. MSTR gives you leverage, institutional access, and financial engineering. Bitcoin gives you direct exposure with no counterparty risk. Right now, in November of 2025, MSTR is showing you the downside of that leverage. Calculate the NAV premium. Take current Bitcoin holdings times Bitcoin price.

Subtract debt. Divide by shares outstanding compared to the stock price. As of November of 2025, this premiums around 20% down from much higher levels earlier in the year. Follow Bitcoin yield metrics. Strategy reports this quarterly. They've achieved 26% through October and are targeting 30% for the year. If they consistently hit or beat targets, the premiums more justified. If they miss, it's a red flag. Monitor debt levels relative to Bitcoin holdings. Right now, with Bitcoin at $100,000 and $8 billion in debt, they're about eight times over collateralized. If Bitcoin falls significantly, watch this ratio carefully.

Track the annual carrying costs. With $689 million in annual interest and dividend payments and growing, this is a real burden that requires continuous capital raising to service without selling Bitcoin. Understand your risk tolerance. This is a volatile, leveraged bet on Bitcoin. The 55% decline from November of 2024 highs to November of 2025 shows just how volatile this can be. Any investor you can afford to lose seriously, this is not a sleep well at night investment. Consider the current market environment. As of November 2025, we're seeing Bitcoin trade around $100,000 after recently dipping below that level.

MSTR is near its 52-week lows. Is this a buying opportunity or a warning sign? That's the question investors are grappling with right now. Look, strategy is one of the most fascinating financial innovations over the past decade. Michael Saylor took a boring software company and turned it into the world's largest corporate Bitcoin treasury. He proved that you can use public capital markets to accumulate Bitcoin at scale. He proved that institutions will pay premiums for access to Bitcoin through familiar investment vehicles. He proved that Bitcoin yields a viable strategy for creating shareholder value.

And in doing so, he created an entirely new asset class, treasury companies. Companies whose primary business is accumulating crypto assets using sophisticated financial engineering. Whether this model works long-term depends entirely on one thing. Does Bitcoin go up over time? If yes, strategy and companies like it will create enormous value. If no, the leverage works in reverse and it's catastrophic. That's the bet. And over 70 companies have made it. As we're seeing in late 2025 with Bitcoin's recent volatility and MSTR's compressed premium and significant stock decline, this is not a one-way trade. The risks are real.

The leverage cuts both ways and market sentiment can shift quickly. Next episode, we're diving into other treasury company models, different strategies, different cryptocurrencies, different risk profiles. You'll want to understand how the landscape has evolved since strategy pioneered this approach. I'm Douglas Borthwick. This is Old Man New Money. If you find this helpful, share it with someone trying to understand treasury companies, but make sure they understand the risks along with the potential rewards.