In a recent podcast with investor Anthony Scaramucci, Galaxy Digital CEO Mike Novogratz delivered a stark warning to publicly traded cryptocurrency treasury companies. He argued that the business model of simply holding digital assets like Bitcoin and Ethereum to create shareholder value is no longer viable for most firms.
The core of Novogratz's argument is that crypto treasuries must transform into conventional businesses with tangible products and clear revenue streams. He stated that the strategy which worked for pioneers like Michael Saylor's MicroStrategy (referred to as "Strategy" in the sources) and Tom Lee's BitMine will not succeed for the majority. Companies that continue to rely solely on holding crypto assets face a choice: evolve or risk trading at steep discounts to their net asset value (NAV), potentially as low as 70 to 80 cents on the dollar.
Novogratz highlighted the current distressed state of the sector. He noted that roughly 40% of Bitcoin treasury stocks now trade below the value of their crypto holdings, a key metric that once allowed them to raise capital. Furthermore, over 60% of these companies purchased Bitcoin at prices far above current market levels, leaving them with significant unrealized losses. The situation is similar for Ethereum treasuries, most of which have stopped their accumulation sprees.
The rise of spot Bitcoin and Ethereum ETFs has fundamentally changed the landscape. These financial products now offer investors direct exposure to the underlying cryptocurrencies, removing the need to pay a premium for shares of a treasury company. This has eroded the value proposition for many firms that relied on stock price appreciation driven by hype.
Novogratz estimated that only three out of fifty treasury companies have successfully executed the pure-play holding model. Even MicroStrategy, the sector's flagship, has seen its stock fall more than 50% over the past six months. For distressed companies, Novogratz suggested a two-pronged approach: buy back discounted stock to narrow the NAV gap and leverage the team's skills to build sustainable business revenue.
In a separate but related analysis, economics author Adam Livingston provided a counterpoint regarding MicroStrategy's specific resilience. His analysis, focused on the firm's 673,783 BTC treasury, concluded that the company is designed to survive extreme market conditions. Livingston modeled that even if Bitcoin's price fell 90% to $9,000, the company would only need to sell about 91,400 BTC annually to meet its dividend obligations—a small fraction of its total holdings. He also noted the company maintains a USD cash reserve offering about 2.7 years of operational runway without selling Bitcoin.
