Strive Chief Investment Officer: Bitcoin Treasury Companies Need to Balance Financing and Buybacks

on November 10, according to a post by Strive Chief Investment Officer Ben Werkman, Bitcoin treasury companies should seek a balance between common stock issuance, credit financing, and stock buybacks, while balancing the interests of common and preferred shareholders.

Werkman stated that when the market capitalization of common stock exceeds the fair value of Bitcoin on the balance sheet, issuing shares and using all proceeds to purchase BTC can increase Bitcoin per share. Using excess cash to repurchase shares can also improve this metric, but it will consume cash reserves.

He believes that issuing credit instruments to purchase BTC can increase Bitcoin per share without issuing additional common stock, but creates dividend obligations and capital costs; continuously using preferred stock financing to repurchase common shares may weaken asset coverage for dividends and affect credit quality.