by Coinstrooper Crypto Articles
Quick Take
  • Bitcoin digital asset treasuries (BTC DATs) have made their decision.
  • They will be judged primarily by one metric: “Bitcoin per share.”
  • This public market version of “whoever has the most Bitcoin wins” marks a new era of Bitcoin adoption and activation.
  • As for what’s next, there remains a clear fork in the road.

What Happened

While financial engineering can create immense value for DATs, it also introduces a critical challenge: dilution.

Using a DAT for financial engineering begs the question: How can I acquire BTC today with the least possible dilution tomorrow?

Oftentimes, acquiring BTC today means issuing stock tomorrow. That means a short-term growth in BPS followed by a return to stasis. This is not a particularly sustainable way to grow Bitcoin per share.

Market Context

This public market version of “whoever has the most Bitcoin wins” marks a new era of Bitcoin adoption and activation.

Specifically, public markets open the door to two major toolsets for BTC DATS:

Why It Matters

Whether through dilutive financial engineering or non-dilutive yield and operations, the path forward may determine whether DATs become a zero-sum, winner-takes-all contest or a positive-sum expansion of Bitcoin utility.

Details

Bitcoin digital asset treasuries (BTC DATs) have made their decision. They will be judged primarily by one metric: “Bitcoin per share.”

As for what’s next, there remains a clear fork in the road. How will BTC DATs actually grow Bitcoin per share?

The Brilliance of BTC DATs

When Bitcoin is put into a DAT, the holder has more tools at their disposal than if it were in a cold wallet.

Income generation: Operations that generate income to earn or purchase more BTC.

Financial engineering: Debt, leverage, and other tools to restructure balance sheets.

While most public companies are known primarily for their income generation, BTC DATs have so far focused primarily on financial engineering.

Strategy (MSTR) is the first and clearest example of a BTC DAT using financial tools to grow Bitcoin per share. Saylor has created a slew of synthetic Bitcoin financial products for Wall Street. STRK, STRF, STRD, and STRC are all products Strategy has carved from its Bitcoin balance sheet.

Wall Street loves these products as they allow them to speculate on Bitcoin in previously unavailable ways. In return, they’ve rewarded MicroStrategy with cheap financing, which MicroStrategy has used to buy more BTC.

Saylor’s successful Strategy has awoken several Bitcoin entrepreneurs who realized that putting their BTC in a DAT can be like putting Tony Stark in the Iron Man suit.

At the same time, it’s important to note that wrapping Bitcoin in a stock is not a fast pass to the end game. It’s very much the beginning of a journey with many potential pitfalls.

The Dilution Trap

Strategy answers that question by offering financial products to Wall Street in exchange for minimally dilutive financing.

However, without Strategy’s scale, cost basis, and financial product suite, it’s really difficult for newer BTC DATs to grow BTC per share via financial engineering.

BTC DATs can compete for minimally dilutive financing by copying Strategy’s playbook, but this of course begs the question of competitive differentiation.

If DATs are only meant to divvy up the Bitcoin financial product pie, then there’s not a ton of room for differentiation or growth.

Thankfully, DATs can move beyond slicing up the pie by growing the pie itself.

How to Grow the Pie