Are We Watching the End of First-Generation Bitcoin Treasury Companies? 

Key Takeaways

• Several major Bitcoin treasury companies are hitting trouble at the same time.
• Investors no longer want companies that just hold Bitcoin. They want real earnings.
• The next wave of treasury companies will likely focus on digital assets that generate income.

Every market cycle has its moments of excess, followed by a period of reflection. Recent developments surrounding several Bitcoin treasury companies (digital asset treasuries, or DATs) may represent one of those turning points.

The first generation of DATs was built on a relatively simple formula: raise capital through new shares or convertible debt, buy more Bitcoin, and rely on investors continuing to pay a premium to the company’s net asset value (the multiple known as mNAV). While Bitcoin prices climbed and capital remained plentiful, the model appeared almost unstoppable.

However, market conditions have changed. Reports that Strategy may need to raise liquidity to meet obligations, Jack Mallers’ departure from Twenty One Capital as it pivots towards cash-generating businesses, and Satsuma shareholders voting to liquidate the company and return capital all suggest investors are becoming far more selective. Owning Bitcoin alone is no longer enough. Markets increasingly want sustainable earnings.

History shows that these types of events often occur late in bear markets. Following the dot-com crash, the Global Financial Crisis and the 2022 crypto lending collapse, excessive leverage was flushed from the system, allowing stronger and more sustainable businesses to emerge. While these developments alone don’t confirm a market bottom, they could represent the beginning of a healthier phase for the industry.

This is where a potential second generation of Bitcoin treasury companies may emerge.

Rather than borrowing money simply to accumulate Bitcoin, the focus shifts towards owning productive digital assets capable of generating cash flow. That could include Bitcoin-backed lending, payment infrastructure, tokenised assets, stablecoins, custody services, settlement networks and other yield-producing opportunities. In this model, shareholder value comes not only from rising Bitcoin prices but from recurring operating income.

Evernorth (XRP DAT) appears to be pursuing this philosophy. By avoiding debt-funded accumulation and instead focusing on productive digital assets and operating yield, it aims to build a more resilient business model that is less dependent on continual capital raising or multiple expansion.

Ultimately, the next generation of successful digital asset companies may be judged by a simple question: if Bitcoin trades sideways for several years, can the business still generate sustainable earnings? The answer to that question may determine which treasury companies thrive in the years ahead.