Dominic Basulto, The Motley Fool
5 min read
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Strategy pioneered the concept of the Bitcoin treasury company and has inspired copycats due to its ability to outperform Bitcoin.
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Due to the amount of leverage being used, investing in a Bitcoin treasury company can be riskier than investing in Bitcoin.
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Over the long haul, Bitcoin is likely to outperform even the most successful Bitcoin treasury companies.
In 2025, Strategy (NASDAQ: MSTR) is up almost 30%, while Bitcoin (CRYPTO: BTC) is only up 11% (as of June 19). But that doesn't make Strategy a better investment than Bitcoin. For long-term investors, it's still better to invest in Bitcoin than a Bitcoin treasury company.
This might be surprising, given that Strategy is now inspiring copycats all over the world. While Strategy's recent stock market performance is impressive, the Bitcoin treasury company strategy lacks the long-term staying power that some people might think. Let's take a closer look.
Strategy began accumulating Bitcoin in August 2020. Over the next four years, it transformed into the world's largest corporate holder of Bitcoin. Then, in February 2025, it took the next step and officially became a Bitcoin treasury company.
Strategy still has a legacy software business, but that's mostly an afterthought these days. Strategy's core mission is to buy as much Bitcoin as it can, regardless of how high the price of Bitcoin goes. This Bitcoin then goes on its balance sheet, just like any other treasury asset, such as cash.
But there's an obvious difference between holding cash on your balance sheet and holding Bitcoin on your balance sheet: Bitcoin is much more volatile. When the price of Bitcoin is going up, this can be wonderful. The value of your company can rise dramatically without you doing much of anything. But when the price of Bitcoin goes down, this results in a direct hit to shareholder equity, dragging down the value of the company.
If Bitcoin treasury companies were financing all their Bitcoin purchases with cash from ongoing operations, this might not be a big deal. Over time, the value of Bitcoin is likely to move much higher, and it's just a matter of hunkering down and outlasting any downturn in the market until the price of Bitcoin recovers. Individual investors do this all the time.
However, Bitcoin treasury companies are now using various forms of debt, including convertible notes and senior secured notes, to finance their Bitcoin purchases. Since Bitcoin treasury companies make no pretense of generating enough cash from operations to cover anything more than basic expenses, this is where the problems can start to occur.
