TLDR
- NYDIG criticizes the mNAV metric used by Bitcoin treasury firms, calling it misleading.
- The mNAV metric fails to account for operating businesses and other assets of Bitcoin treasury firms.
- NYDIG points out that mNAV includes unconverted convertible debt, which can create a significant liability.
- BTC treasury firms are currently trading below their mNAV, indicating potential acquisitions in the sector.
- Strive Asset Management’s acquisition of Semler Scientific highlights concerns over Bitcoin treasury firm valuations.
Strive Asset Management (ASST) recently acquired Semler Scientific (SMLR) in an all-stock deal. This historic move has raised concerns over the valuation methods used by Bitcoin treasury firms. The acquisition gives the combined company control of more than 10,900 BTC, increasing the net asset value (NAV) per share.
mNAV Metric Deemed Misleading by NYDIG
In a note this week, NYDIG’s Global Head of Research, Greg Cipolaro, criticized the common use of the “mNAV” metric. Cipolaro argued that this metric, defined as market cap divided by crypto held, can be misleading. “At best, it’s misleading; at worst, it’s disingenuous,” Cipolaro said.
NYDIG explained that mNAV fails to consider a BTC treasury’s operating business or other assets. Most BTC treasury firms operate businesses that add significant value to the firm’s overall worth. This omission distorts the true financial health of these companies.
Bitcoin Treasury Firms Face mNAV Challenges
Further, NYDIG pointed out that mNAV often includes assumed shares outstanding, which may involve unconverted convertible debt. If the debt holders demand cash instead of shares, it creates a liability for the Bitcoin treasury firm. “Convertible debt is essentially volatility harvesting,” NYDIG explained, highlighting how this affects the firm’s stock.
Currently, BTC treasury firms control over 1 million BTC. Many of these firms are trading below their mNAV, which could signal upcoming acquisitions. Investors may expect further consolidation in the sector as a result.
