Let’s talk about Digital Asset Treasury (DAT) companies. They’re not your typical publicly listed firms. Instead of building products or offering services, these companies raise money to buy Bitcoin. Think of them as financial wrappers that give investors a turbo-charged way to get into crypto — without needing wallets, seed phrases, or private keys.
This model is new, bold, and increasingly controversial. It’s caught the eye of institutional investors, retail traders, and critics alike. But it’s also starting to show some cracks.
From Software to Sats: The Strategy Inc. Blueprint
The best-known example of a DAT is Strategy Inc., formerly known as MicroStrategy. Back in 2020, the company shifted away from its core software business and went all-in on Bitcoin. That wasn’t just a portfolio diversification move. It was a full identity pivot.
Here’s how it works. Strategy Inc. maintains a premium between its market capitalization and the net asset value (NAV) of its Bitcoin holdings. That premium — called the market-to-net-asset-value ratio, or mNAV — lets them issue new shares at higher prices. They then use that cash to buy more Bitcoin. This recursive loop helps grow both the company’s NAV and its share price, as long as the mNAV premium stays intact.
This structure turns Bitcoin accumulation into a financial engine. And it worked — for a while. By 2025, over 150 public companies had launched variations of the same playbook. But copycat enthusiasm might be oversaturating the space.
How DATs Try to Engineer Outperformance
So what’s under the hood of a Digital Asset Treasury company? It’s not just about holding Bitcoin. It’s about strategically raising and deploying capital to maximize Bitcoin per share, a metric akin to earnings per share (EPS) in traditional equity analysis.
Here are three common tools DATs use:
- Equity Issuance at Premium Valuations
When a company’s stock trades above the NAV of its BTC holdings (i.e., mNAV > 1.0), it can sell new shares at that elevated price. The company uses the proceeds to buy more Bitcoin, increasing total holdings and potentially raising Bitcoin per share.
This mechanism only works if the premium persists. Once mNAV dips below 1.0, issuing new shares becomes destructive. Investors get diluted without any corresponding increase in value.
- Convertible Bonds
Strategy Inc. has leaned heavily into convertible debt — bonds that can convert into equity. This strategy allows the company to raise capital efficiently without immediate dilution. It’s a sweet deal when markets are bullish.
But convertibles are leverage. And leverage cuts both ways. If Bitcoin’s price crashes or capital markets tighten, the company may struggle to refinance or repay its debt, especially if confidence erodes.
- Preferred Equity Offerings
Another tool is issuing preferred shares — instruments that pay fixed or floating dividends and sit ahead of common equity in the capital stack. Strategy Inc.’s Series A “Stretch” (STRC) preferred shares are an example.
These were marketed to yield-hungry investors in a low-rate environment. But the results were underwhelming: the offering raised just $47 million out of a targeted $500 million. That’s not just a capital shortfall — it’s a signal that investor appetite may be fading.
Why Investors Still Like the DAT Model (For Now)
Despite warning signs, there’s a reason these structures have gained traction.
- Institutional Access Without Custody Risk
Many pension funds, insurance companies, and large asset managers can’t hold crypto directly due to regulatory and custody limitations. DATs solve that problem. They’re exchange-traded, fully audited, and fall within traditional compliance rails.
- Embedded Leverage as a Feature
DATs are designed to behave like long-dated call options on Bitcoin. If the market goes up, their embedded leverage enhances returns. For aggressive investors, that optionality is a major draw.
- Stock Exchange Liquidity
Unlike crypto tokens that trade 24/7 on fragmented offshore platforms, DATs trade on mainstream exchanges like NASDAQ, Tokyo Stock Exchange, and others. They’re settled through clearinghouses. That makes them more palatable to old-school allocators.
- Regulatory Transparency
DATs are registered entities that file 10-Qs, 8-Ks, and annual audits with the SEC. This regulatory oversight builds trust, especially compared to offshore crypto trusts or decentralized protocols with minimal disclosure.
- Dividends and Yield-Generating Structures
Some DATs pay out income — either through preferred shares or special dividends tied to performance. While these are not DeFi-level yields, they offer income in a sector mostly known for capital gains.
Cracks Are Starting to Show
Not everyone is convinced the model is sustainable. Hedge fund manager Jim Chanos, famous for shorting Enron, says we’ve seen this movie before. At a private dinner hosted by Mizuho Securities, he compared DATs to past speculative booms.
In 1989, European closed-end country funds traded at huge premiums — until a flood of new entrants destroyed the scarcity premium. The same happened with dot-com spin-offs in 2000.
DATs could be headed down a similar path. Chanos notes that a Japanese nail salon and a Spanish coffee brand have launched DAT-style structures. When niche retail brands start mimicking a Wall Street arbitrage model, something’s off.
Major Structural Risks in the DAT Model
Here are four of the biggest risk factors:
- mNAV Compression
As more companies mimic the strategy, the premium shrinks. Once mNAV < 1.0, the flywheel stops turning. Capital raising becomes destructive. Investors get diluted without accretive Bitcoin accumulation.
Case in point: Strategy Inc.’s mNAV dropped from over 6.0x in 2021 to under 2.0x by mid-2025. That’s not just market noise — it’s erosion of the engine itself.
Exhibit 1: Decline in Strategy Inc.’s Market-to-Net Asset Value (mNAV) Premium, 2020–2025
This chart tracks Strategy Inc.’s mNAV ratio. After peaking above 6.0x in early 2021, the premium has steadily compressed, falling below 2.0x by mid-2025. This erosion reflects rising investor skepticism, dilution pressure, and saturation of the DAT model. The decline in mNAV highlights how fragile the recursive capital model can become in a crowded market.
- Debt Service and Refinancing Risk
Strategy has about $100 million in convertible debt due in 2030. If Bitcoin enters a prolonged bear market, servicing that debt becomes harder. Lower stock prices reduce refinancing options.
- Reflexive Downturn Loops
Falling stock prices reduce the mNAV ratio. That limits the ability to raise capital. This limits Bitcoin accumulation. Which hurts sentiment further. It’s a self-reinforcing spiral.
- Regulatory and Index Inclusion Headwinds
Without real operating businesses, DATs risk classification under the Investment Company Act of 1940. That would disqualify them from major indices like the S&P or Russell 2000 — a huge problem for passive flows.
Can DATs Evolve Into Real Companies?
To survive beyond the Bitcoin cycle, DATs need to develop real business lines. Strategy Inc. still reports software revenue, but it’s dwindling.
Some players are looking to:
- Build staking infrastructure for PoS blockchains
- Launch validator-as-a-service platforms
- Offer tokenized financial services
These moves are promising — but early. Without real revenue, these companies remain leveraged Bitcoin trackers with regulatory overhangs.
Final Take: A Fragile Bridge Between Wall Street and Web3
Digital Asset Treasuries are clever. They connect traditional capital markets with crypto-native assets. They offer access, transparency, and optionality — all things institutional investors crave.
But they also carry echoes of past bubbles: closed-end fund booms, dot-com frenzies, and SPAC mania. As Jim Chanos says, “We’ve seen this before.”
If DATs want to matter in the long run, they’ll need more than Bitcoin on the balance sheet. They’ll need vision, product-market fit, and yes — actual revenue.
For now, they remain fascinating experiments. But they won’t stay relevant unless they evolve.
