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BTC New insights into Bitcoin holdings: key indicators of valuation
Companies that hold Bitcoin stocks are receiving widespread attention. Although their investment scale is large, it is significantly different from directly holding Bitcoin. A key indicator to assess this difference is market net asset value (mNAV). The indicator measures how aligned a company's market value is with the value of the bitcoin it holds.
How is mNAV calculated?
The mNAV indicator is usually calculated by dividing the market value of a company's equity by the market value of its Bitcoin holdings. When the ratio is 1.0 times, it means that the company's valuation is consistent with its Bitcoin assets. If mNAV is 1.5 times, it means that investors attach $1.5 in value to every $1 of Bitcoin assets in the company; while 0.8 times represents a discount pricing. However, the calculation of mNAV is not a universal standard and may include factors such as debt, preferred stock and deducting cash before comparing the derived business value with the company's net Bitcoin assets. BitcoinTreasuries.net adopts this corporate value-based approach for treasury companies with Bitcoin at its core.
Why do companies experience a premium on trading?
The company's trading price is higher than its net asset value, indicating that investors 'interest is not limited to acquiring existing Bitcoin inventories. This premium allows companies to raise money by issuing new shares, which in turn buys more bitcoins. If executed properly, this process can increase the amount of Bitcoin support circulating per share.
A typical example is Strategy. The company raised funds through a successful share issue to fund the Bitcoin acquisition. Although its origins were a publicly traded software company, Strategy stands out by accumulating large corporate bitcoin reserves in the market. According to its recent SEC filings, as of September 7, the company held approximately 845,050 BTC units worth approximately $63.73 billion, with an average acquisition cost of $75,412 per bitcoin. Recently, Strategy's mNAV ratio has hovered around 1.14 times, indicating that it is slightly above the value of its net Bitcoin assets, but this ratio will change with fluctuations in MSTR's share price and Bitcoin prices.
Strategy emphasizes that its mNAV measurement is by comparing stock prices to the net bitcoin value per share, which is different from traditional accounting-based NAV.
Does a discount always mean a leak?
found that mNAV below 1.0 times does not necessarily mean that stocks are undervalued. Markets may have taken into account factors such as the company's debt burden, preferred stock obligations, dilution risk, management concerns or potential future Bitcoin sales. Metaplanet is a typical example of this situation, and its recent trading price was approximately 0.97 times mNAV, indicating that its market valuation is very close to or slightly lower than its Bitcoin treasury. The Japan-based company stands out for its balance sheet strategy focused on Bitcoin.
Summary of core views
mNAV is an important indicator to measure the difference between Bitcoin holdings and direct investment. Premium potential helps companies expand Bitcoin assets beyond their current positions. Strategy's huge Bitcoin reserves place its position in the market in sharp contrast to its software origins. Due to the existence of multiple risk factors, a discounted mNAV does not automatically indicate that the stock is undervalued. Previously, the reduction in premiums observed in Bitcoin treasury shares has caused investors to suffer losses. Such premiums can quickly disappear when capital markets cannot provide support. In view of this, Strategy has developed a multi-layered structure that goes beyond direct Bitcoin acquisitions, integrating lending instruments, preferred securities and potential BTC sales to maintain liquidity.
