The mystery of MicroStrategy’s high premium: leverage effect and the “perpetual motion machine” of capital games

By Will Owens, Galaxy

Compiled by AididiaoJP, Foresight News

Companies that have added Bitcoin to their balance sheets have become one of the most talked-about narratives in the public markets in 2025. While investors have a variety of ways to directly gain exposure to Bitcoin (ETFs, spot Bitcoin, wrapped Bitcoin, futures contracts, etc.), many choose to gain exposure to Bitcoin by purchasing shares of Bitcoin Reserve Company, which trades at a significant premium to Bitcoin’s net asset value (NAV).

This premium is the difference between a company's share price and the value of its Bitcoin holdings per share. For example, if a company holds $100 million worth of Bitcoin and has 10 million shares outstanding, its NAV per Bitcoin share is $10. If the share price is $17.5, the premium is 75%. In this context, mNAV (net asset value multiple) reflects how many times the share price is the Bitcoin NAV, and the premium is the percentage of mNAV minus 1.

Ordinary investors may wonder: Why are the valuations of such companies far higher than their Bitcoin assets themselves?

Leverage and access to capital

Perhaps the most important reason why Bitcoin Reserve shares trade at a premium to their Bitcoin assets is that they can leverage public capital markets. These companies can raise funds to increase their Bitcoin holdings by issuing bonds and stocks. In essence, they act as high-beta proxies for Bitcoin, amplifying Bitcoin's sensitivity to market fluctuations.

The most common and effective means of this strategy is the "at-the-market" (ATM) stock issuance plan. This mechanism allows companies to gradually issue additional shares at the current share price with minimal impact on the market. When the share price is at a premium to Bitcoin's NAV, the number of Bitcoins that can be purchased for every $1 raised through the ATM plan will exceed the dilution of Bitcoin holdings per share caused by the issuance. This forms a "value-added cycle for each Bitcoin holding", which continuously increases Bitcoin exposure.

Strategy (formerly MicroStrategy) is a prime example of this strategy. Since 2020, the company has raised billions of dollars through convertible bond issuance and secondary equity offerings. As of June 30, Strategy held 597,325 bitcoins (about 2.84% of the circulating supply).

This type of financing tool is only available to listed companies, allowing them to continue to increase their holdings of Bitcoin. This not only amplifies Bitcoin exposure, but also forms a compound narrative effect. Every successful fundraising and Bitcoin increase strengthens investors' confidence in the model. Therefore, investors who buy MSTR stock are not only buying Bitcoin, but also buying "the ability to continue to increase Bitcoin in the future."

How big is the premium?

The table below compares the premiums of some Bitcoin reserve companies. Strategy is the largest publicly traded company in the world and the most well-known representative in the field. Metaplanet is the most aggressive Bitcoin holder (more on its transparency advantage later). Semler Scientific was an early adopter of this trend, starting to buy Bitcoin last year. And France's The Blockchain Group shows that this trend is spreading from the United States to the world.

Selected Bitcoin Reserve NAV premiums (as of June 30; assuming a Bitcoin price of $107,000):

While Strategy's premium is relatively modest (about 75%), smaller companies such as The Blockchain Group (217%) and Metaplanet (384%) have significantly higher premiums. These valuations suggest that market pricing has not only reflected the growth potential of Bitcoin itself, but also included a comprehensive consideration of capital market accessibility, speculative space, and narrative value.

Bitcoin yield: The key metric behind the premium

One of the core indicators driving the premium of these companies' stocks is "Bitcoin yield". This indicator measures the growth of a company's Bitcoin holdings per share over a specific period of time, reflecting its efficiency in using fundraising capabilities to increase its Bitcoin holdings without causing excessive equity dilution. Among them, Metaplanet is known for its transparency. Its official website provides a [Real-time Bitcoin Data Dashboard], which dynamically updates Bitcoin holdings, Bitcoin holdings per share, and Bitcoin yield.

 Source: Metaplanet Analytics (https://metaplanet.jp/en/analytics)

Metaplanet has made proof of reserves public, a move that other companies in the industry have not yet adopted. For example, Strategy does not use any on-chain verification mechanism to prove its Bitcoin holdings. At the Bitcoin 2025 conference in Las Vegas, [Executive Chairman Michael Saylor explicitly opposed] making proof of reserves public, saying that this would be a "bad idea" due to security risks: "It would weaken the security of issuers, custodians, exchanges and investors." This view is controversial, and on-chain proof of reserves only requires public keys or addresses, not private keys or signature data. Because Bitcoin's security model is based on the principle that "public keys can be safely shared", making wallet addresses public does not jeopardize the security of assets (this is a feature of the Bitcoin network). On-chain proof of reserves provides investors with a way to directly verify the authenticity of a company's Bitcoin holdings.

What happens if the premium disappears?

The high valuations of Bitcoin Reserves have so far existed in a bull market environment of rising Bitcoin prices and high retail investor enthusiasm. No Bitcoin Reserve has ever been trading below NAV for a long time. The business model is premised on a persistent premium. As [VanEck analyst Matthew Sigel points out]: "When the stock price falls to NAV, equity dilution ceases to be strategic and becomes value extraction." This statement points to the core vulnerability of the model. ATM equity issuance plans (the capital engine of these companies) are inherently dependent on a stock price premium. When the stock price is above the value of each Bitcoin, equity fundraising can achieve an increase in the value of each Bitcoin held; but when the stock price falls to around NAV, equity dilution will weaken rather than enhance shareholders' Bitcoin exposure.

The model relies on a self-reinforcing cycle:

1. Share price premium supports fundraising capabilities
2. Fundraising to increase Bitcoin holdings
3. Bitcoin accumulation strengthens company narrative
4. Narrative value maintains a premium on share prices

If the premium disappears, the cycle will be broken: financing costs rise, Bitcoin holdings slow down, and narrative value weakens. Currently, Bitcoin Reserve still enjoys capital market access and investor enthusiasm, but its future development will depend on financial discipline, transparency, and the ability to "increase Bitcoin holdings per share" (rather than simply piling up the total amount of Bitcoin). The "option value" that makes these stocks attractive in a bull market may quickly turn into a burden in a bear market.