Do you wonder how publicly listed companies can hold large amounts of Bitcoin or other digital assets without diluting shareholders? This article explains the crypto treasury model, how a premium over net asset value (NAV) supports it, and what the recent shift in investor sentiment means for anyone looking to earn passive income through such vehicles.
The crypto treasury model in plain terms
A crypto treasury company—sometimes called a digital‑asset‑treasury (DAT) firm—raises capital by issuing shares on a public market. Instead of using the proceeds to fund traditional operations, the company buys and holds cryptocurrencies directly on its balance sheet. The value of the assets under management (AUM) is measured by the net asset value (NAV), which is essentially the total market value of the crypto holdings divided by the number of outstanding shares.
Investors often pay a price that is higher than the NAV. This difference is called a premium. For example, if a company’s NAV is $10 per share but the market price is $12, the premium is 20 %. The premium matters because it allows the company to issue new shares at a price above the underlying crypto value, then use the proceeds to buy more crypto. This process expands the treasury without diluting existing shareholders—each share’s claim on the assets stays roughly the same, but the total pool of crypto grows.
If the market price falls below the NAV, the premium disappears. In that case, issuing new shares would raise less money than the amount needed to buy an equivalent amount of crypto, effectively diluting existing shareholders. Companies that consistently trade below NAV may have to rely on other financing methods, such as debt, which can increase risk.
Real‑world illustration
In October 2026, a report from DWF Ventures highlighted that only four of the twenty largest crypto treasury firms still trade above a NAV multiple of 1. Those firms—Bit Digital, Strive, Hyperliquid Strategies, and BitMine—retain a premium that lets them raise equity without immediate dilution. The other sixteen firms now trade at a discount, meaning investors are no longer willing to pay extra for exposure to the underlying crypto through a public stock. This shift reflects a broader market trend: while billions are flowing back into crypto companies, the “crypto premium” that once buoyed many treasury models has largely evaporated.
What this means for you
If you are considering earning passive income by buying shares of a crypto treasury company, the presence or absence of a premium directly affects your potential returns. When a premium exists, the company can grow its crypto holdings more efficiently, which may lead to higher future earnings per share. Conversely, a discount can signal that the firm will need to issue new shares at a lower price, potentially reducing the value of each existing share.
Moreover, a discount often reflects investor skepticism about the firm’s ability to manage its holdings, regulatory risk, or broader market sentiment. As a result, the share price may be more volatile, and the expected yield from any dividend‑like distributions (often paid in the form of additional crypto) could be lower.
How to evaluate a crypto treasury investment
- Check the premium or discount. Compare the current market price per share with the calculated NAV. A consistent premium suggests the company can raise capital efficiently.
- Assess the quality of the underlying assets. Look at which cryptocurrencies the firm holds, their liquidity, and concentration risk (e.g., heavy reliance on Bitcoin versus a diversified basket).
- Review the balance sheet. A strong cash position and low debt indicate the firm can weather crypto price swings without needing to sell assets at a loss.
- Understand the growth strategy. Does the company plan to acquire more crypto, develop related services, or rely on passive holding? Transparent roadmaps reduce uncertainty.
- Consider regulatory exposure. Companies operating in jurisdictions with clear crypto regulations face fewer legal hurdles, which can protect shareholder value.
FAQ
Why do some crypto treasury companies still trade above NAV while others don’t?
The difference often comes down to investor confidence in management, the diversity of holdings, and recent performance. Firms that have demonstrated consistent growth and transparent governance tend to retain a premium.
Can a company regain its premium after falling below NAV?
Yes, if it can improve its fundamentals—such as acquiring more crypto at favorable prices, reducing debt, or launching profitable services—investors may start paying a premium again.
Is buying shares of a crypto treasury company the same as buying the underlying crypto?
Not exactly. Shareholders own a claim on the company’s assets, not the crypto directly. This adds layers of corporate risk, but also offers the convenience of a regulated stock‑market environment.
What risks should I be aware of?
Key risks include market volatility of the underlying crypto, regulatory changes that could affect the company’s operations, and the possibility of dilution if the firm must raise capital at a discount.
This article references reporting from cointelegraph.com.
