MSTR is rated B. Is DAT company also worth understanding and investing in?

Original Title: narrative crypto vs usable crypto
Original Author: @0xnoveleader, Castle Labs; @BukovskiBuko3, The Big Whale
Compiled by: Peggy, BlockBeats

Editor’s Note:

In the same week that S&P Global issued its first credit rating for Strategy (formerly MicroStrategy) and rated it "B-", discussions about Digital Asset Treasuries (DAT) entered a new phase. The symbolic significance of this rating goes far beyond the company itself; it marks the first time the Bitcoin treasury model has been incorporated into the mainstream credit assessment framework.

This is both an acknowledgment and a collision. S&P examines Strategy through the lens of traditional finance, believing that its structure of "assets being Bitcoin and liabilities being USD" presents a fundamental currency mismatch; meanwhile, advocates in the crypto world insist that this is precisely a paradigm shift for the new generation of "asset-based companies."

The DAT model connects risks and possibly the future. It represents a middle ground between crypto and capital markets—belonging neither entirely to the "crypto circle" nor to the "stock market." Strategy has been rated as "junk," but in a sense, this is the first time a digital asset treasury has qualified for a rating. In the future, how traditional rating agencies quantify Bitcoin risk and how investors view the "crypto version of Berkshire Hathaway" will determine whether DAT can transition from speculative narratives to a part of the financial structure.

The following is the original text:

Introduction

Digital Asset Treasuries (DATs) are increasingly becoming a mechanism to attract traditional finance (TradFi) attention to blue-chip crypto assets (such as $BTC and $ETH). We are experiencing a wave of DAT projects, the core idea of which is to accumulate digital assets as the core asset of a company's treasury.

The DAT model provides investors with a way to gain exposure to crypto assets similar to stocks—investors do not directly purchase cryptocurrencies but instead buy shares of companies that hold crypto assets. This model can also be understood as a "crypto asset wrapper," allowing investors to avoid dealing with complex self-custody processes or facing the risks of data leaks and social engineering attacks associated with exchanges.

The most representative DAT currently is Strategy (formerly @MicroStrategy), which holds approximately 640,000 Bitcoins, accounting for 3% of the total Bitcoin supply. With the success of Strategy and the soaring price of its stock ($MSTR), this model has become extremely attractive to other companies—they can finance the purchase of crypto assets, thereby driving changes in per-share asset support and triggering market speculation on their net asset multiples (mNAV) and premiums/discounts.

This article aims to delve into the operational mechanisms of DATs, key indicators, current market landscape, participating companies, potential risks, and ultimately assess their long-term sustainability.

What are DATs? How do they operate?

The term DAT was born with the transformation of Strategy. Originally a software company providing business analytics services, Strategy transformed into a DAT in August 2020, after which its stock price increased by over 2000%. While part of the reason is that it became the first publicly traded company to purchase Bitcoin on a large scale, this also validates the feasibility of the DAT model as a business opportunity.

At the core of DATs is the "asset accumulation tool for equity financing," which raises funds through issuing stock to purchase crypto assets, thereby increasing the exposure of crypto assets on the company's balance sheet. Its valuation and operational metrics (such as NAV, mNAV, premiums/discounts) are highly dependent on the price fluctuations of the held assets.

Digital Asset Treasuries can be categorized into the following types:

1. Primary DATs: These are the most typical digital asset treasury companies that accumulate specific assets (such as BTC or ETH) through equity financing. Representative companies include Strategy and BitMine.

2. Secondary DATs: These companies do not fully adopt the digital asset treasury model but support their stock prices through other businesses and utilize digital assets for diversified exposure. These companies generate revenue through their main business and accumulate crypto assets with part of that revenue. Representative companies include Tesla, Galaxy, and MARA.

3. Yield-Active DATs: These companies aim to generate income from their crypto assets. For example, Sharplink stakes most of its ETH and earns staking rewards from it.

4. Diversified DATs: These companies are still accumulating crypto assets but do not focus on a single asset; instead, they hold multiple assets. Representative companies include Nepute Digital Assets Corp (holding BTC, ETH, SOL) and BTCS Inc (holding ETH, ADA, SOL).

While this report will not strictly differentiate between these different types of digital asset treasury companies, it will select a few as case studies for in-depth analysis.

Key Terminology of DATs

To better understand the operational mechanisms of DATs, this section will introduce a series of key terms that are important indicators for assessing the health of a DAT.

Net Asset Value (NAV): Refers to the net value of the DAT treasury, calculated as the number of assets in the treasury multiplied by their USD price. For example, if a DAT holds 10,000 BTC (with each BTC priced at $114,000), its NAV would be $1.14 billion.

Net Asset Value per Share (NAVps): NAV divided by the total number of diluted shares outstanding. This metric reflects the value that each share should represent. If the market price is higher than NAVps, it indicates a premium on the company's stock; conversely, it indicates a discount.

Crypto Asset per Share (CPS): The number of crypto asset units represented by each share. It measures the quantity of BTC, ETH, or other assets corresponding to each share.

Market Value to Net Value Ratio (mNAV): The ratio of the company's market value to its NAV. If mNAV is greater than 1.0, it indicates that the stock trading price is above the treasury value (investors are paying a premium to gain crypto exposure, leverage, or options); if mNAV is less than 1.0, it indicates market skepticism, governance risks, or insufficient information disclosure, leading to a discount.

Accretion/Dilution Test: An issuance is beneficial to investors (accretion) only if the amount of crypto assets purchased with newly issued shares exceeds the current CPS. The formula is as follows: ΔU/ΔS > U/S

Where:

ΔU: The number of newly acquired crypto assets

ΔS: The number of newly issued shares

U: The current amount of crypto assets held

S: The current number of shares outstanding

For example: A company plans to raise $1 billion, currently trading at a 40% premium (mNAV=1.4), with the treasury holding 200,000 BTC (NAV=$22 billion), and there are 20 million shares outstanding, with a total market value of $30.8 billion. The price per share is $1540, so the company needs to issue about 650,000 shares to complete the financing.

After financing, the company purchases 9,000 BTC at $110,000 each, bringing the total treasury holdings to 209,000 BTC. The original CPS was 200,000/20,000,000=0.01, and the new CPS is 209,000/20,650,000≈0.0101, indicating that this financing slightly benefits investors.

Financing Mechanisms of DATs

DATs can raise funds for their treasury through various means, primarily including:

1. ATM Issuance
The company establishes an ATM issuance plan with an investment bank to gradually sell shares in the market and use the proceeds to purchase crypto assets. This method is suitable when the stock trading price is above NAV and is a flexible, low-friction financing tool, but excessive use may lead to shareholder dilution.

2. Block Raises / Secondaries
The company issues a large number of shares at once and sells them to investors at a price slightly below the market price to execute large crypto asset purchases. This method can quickly replenish the treasury but may lead to short-term dilution.

3. Convertible Notes
The company issues bonds with fixed interest rates, maturity dates, and conversion terms (which can be converted into stock at a set price in the future). This method can raise funds without immediately diluting shareholders, but if the stock price rises and stays above the conversion price for a long time, the company may require the debt to convert into equity, leading to dilution; if the stock price falls, the debt remains debt, facing repayment or refinancing risks.

4. Preferred Stock
The company raises funds by issuing preferred stock, which has superior dividend and liquidation rights compared to common stock and may come with fixed dividends, conversion rights, or special rights. This method generally has a lower financing cost compared to common stock but creates a "senior equity" structure, compressing the upside potential for common stockholders.

5. Operating Cash Flow (OCF)
The company does not raise funds through issuing new shares or bonds but instead uses part of its operating profits to purchase crypto assets. This is the most sustainable and least dilutive way to build a treasury, but the accumulation speed is slower.

Current DAT Landscape

Institutional interest in digital assets is growing, giving rise to a diverse group of DAT companies that are trying to capture one of the most important market narratives of 2025. Starting from Strategy, which initially focused on BTC, the DAT model has rapidly evolved to cover other mainstream public chain assets, such as Ethereum and Solana. Almost all DAT companies' management teams focus on enhancing the core metric of "crypto asset units per share."

The DAT companies analyzed in this section represent the publicly traded companies with the highest market capitalization among various crypto assets. Among them, Strategy and Metaplanet together hold 64% of the total assets under management (AUM) of all BTC DAT companies, with Strategy alone accounting for 61.22%.

In terms of ETH DAT companies, @BitMNR holds 49.66% of the total AUM of ETH DATs, while Sharplink accounts for 14.72%. It can be seen that early participants dominate both the BTC and ETH markets.

Strategy first proposed the concept of DAT in 2020, and the market took four and a half years to gradually enter the mainstream stage, with new competitors emerging in both the BTC (Metaplanet) and ETH (Bitmine and Sharplink) fields.

Strategy is a pioneer in this field, continuously accumulating Bitcoin. Over the past five years, the company has held 640,250 BTC, with a current NAV of approximately $7 billion. In 2025 alone, the company purchased 116,554 BTC, achieving a 26% increase in BTC.

From a timeline perspective, Strategy primarily used the ATM model for Bitcoin purchases, initially selling shares at a premium of up to 6 times, then gradually falling to the 2.5x--3x range, and currently stabilizing at an mNAV level below 1.5x, currently at 1.16x base NAV and 1.293x diluted mNAV.

MSTR's mNAV premium data source: BITCOINTREASURIES.NET

The most mainstream financing tools currently are preferred stock and convertible bonds, favored by hedge funds and institutional investors to hedge against the impact of ongoing equity dilution while maintaining continuous Bitcoin accumulation.

Due to its first-mover advantage and high recognition among global stock market investors (almost entering the S&P 500 index), Strategy has become the industry benchmark, even "too big to compare." This also means it bears a tremendous responsibility: if it fails, it could cause structural shocks to confidence in both the stock market and digital assets.

Another important BTC DAT company is @Metaplanet_JP from Japan. Originally operating in the hotel business, the company now holds over 30,823 BTC. It purchases BTC at extremely high NAV premiums, with premiums reaching as high as 8 times at one point during the year, meaning that for every $1 of BTC held, it can raise $8. One reason for such a high premium is its listing on the Tokyo Stock Exchange. Compared to the Nikkei Index, Metaplanet exhibits higher volatility, providing ordinary Japanese stock market investors with BTC exposure.

Now let's take a look at the development of ETH DATs.

BitMine was originally a Bitcoin mining company focused on immersion cooling data centers, transforming into an ETH treasury company in July 2025. Following closely is Sharplink, a company focused on sports betting marketing technology, which is currently the second-largest ETH DAT. Together, these two companies hold over 3.87 million ETH, with a total value exceeding $15 billion. Their earnings per share (EPS) are 189.1% for BitMine and 98.5% for Sharplink.

Similar to Metaplanet, these two companies also prefer to use ATM equity financing strategies, selling shares when premiums exist to effectively raise funds without relying on dilutive block issuances or debt financing, thus achieving an increase in crypto asset units per share. Once the premium disappears and mNAV falls below 1, it will lead to dilution, further reducing the crypto asset units per share. Currently, Sharplink's mNAV is 0.92x, slightly discounted; BitMine's mNAV is 1.18, with a premium of about 18%.

One significant advantage of ETH DATs is the ability to earn native income through staking ETH. This is an automated mechanism that can increase the number of ETH per share. Additionally, staking rewards can be used to enhance annualized yield (APY), such as investing in DeFi protocols or repurchasing shares; Sharplink is adopting this strategy to offset the dilution effect brought by the ATM strategy.

Aside from MSTR, most DAT companies are still in their early stages. Aggressive capital-raising behavior reflects their desire to act quickly in a bull market and seize the opportunities arising from the integration of equity and digital asset markets.

Risks of the DAT Model

The core feature attracting funds into DAT stocks is their "market value to net value ratio" (mNAV). Speculators flock to these stocks, hoping to buy shares before the prices of crypto assets rise, thus achieving returns of 1.5 to 7 times on every dollar invested. However, there is a key issue: investors are not directly purchasing Bitcoin or Ethereum through these companies but are buying a "volatility wrapper," the entire value of which is determined by the current trading mNAV of the DAT. Therefore, such investments come with substantial risks, and market participants must remain vigilant.

One of the main risks of the DAT model comes from its business mechanism for accumulating BTC and ETH. The most direct factor affecting stock prices is ongoing equity dilution. From 2022 to the end of 2024, Strategy is expected to dilute shareholders by an average of 45.88% per year; Metaplanet's equity dilution rate is projected to reach 98% by the end of this year. In comparison, BitMine and Sharplink also have very high dilution rates of 24.25% and 11.4%, respectively, primarily due to their use of the ATM model to acquire ETH. Sharplink's dilution rate is calculated quarterly (from Q1 to Q2), while BitMine's dilution rate is based on its $25 billion ATM plan's fully diluted estimate at the current stock price.

Due to negative operating cash flow (MSTR's second-quarter operating cash flow was -$34 million, and Sharplink's was -$1.62 million), DAT companies typically choose the ATM model to acquire crypto assets. However, this method is only effective when there is a market premium; once a discount occurs, the company will be unable to maintain its purchasing pace, leading to stagnation in crypto asset units per share and further selling pressure from investors.

To avoid ongoing dilution, MSTR and other companies choose to finance through issuing convertible bonds. Convertible bonds are typically purchased by hedge funds that employ "Delta neutral strategies," as the bonds embed OTM (out-of-the-money) options. The funds establish short positions, creating ongoing selling pressure.

Meanwhile, rising stock prices will enhance the value of the bonds as OTM options appreciate. The bonds also come with a small annual interest, further enhancing returns. When the stock price approaches the conversion price, the bond's Delta increases, and its value rises accordingly.

Conversely, when the stock price falls, hedge funds can profit not only from their short positions but also because the bond's value will not drop rapidly due to the over-collateralization of BTC holdings relative to common stock, creating "option protection," i.e., the convexity of the bonds.

Ultimately, convertible bondholders are often reluctant to convert into stock: during their holding period, they have the maximum BTC allocation rights in the event of company bankruptcy and can utilize volatility gains over the long term. The ideal scenario for hedge funds is to extend the debt— as long as the actual volatility of common stock is sufficiently high to support dramatic price fluctuations (requiring participation from speculative buyers), they will continue to hold the convertible bonds.

The third financing method is issuing preferred stock. This strategy was pioneered by Strategy to hedge against dilution without significantly increasing debt. Preferred stock typically offers annual dividends, but since DAT companies often have negative or very low cash flows, this further undermines their profitability.

In addition, there are other risks worth noting, including insufficient treasury transparency, risks in executing stock buybacks (due to lack of income or liquidity), liquidity risks during emergency sell-offs, and ongoing insider selling of shares, all of which exert significant pressure on stock prices.

Recently, we have seen a substantial decline in the market value of these DAT stocks: MSTR fell by 44%, and Metaplanet dropped by over 70%. These risks have been fully priced in by the market, indicating that the DAT model may be losing momentum, and explaining why DATs have underperformed their held crypto assets during the current bull market phase.

Strategy vs BTC performance over the last three months

BitMine vs ETH performance over the last three months

Can DATs Surpass BTC and ETH?

Using Ethereum as treasury assets allows DAT companies to earn approximately 3.18% annualized yield through staking, which helps enhance the per-share ETH metric. However, even with the most mature DeFi protocols, without additional capital injection, DATs will still require a long time to significantly increase per-share ETH, while also introducing counterparty risks. Although staking and yield farming can generate cash flow for ETH and other altcoin-type DATs, the current scale of these yields remains limited, making it difficult to provide substantial assistance. To truly build a self-sustaining ETH treasury flywheel, companies must accumulate sufficient funds to generate high enough yields to cover all expenses and enhance shareholder value.

As for whether yield-oriented DATs (such as ETH DATs) can outperform BTC DATs, the key lies in the market's preference for the underlying assets they rely on. Currently, the market shows a stronger preference for BTC DATs, especially with MSTR's mNAV performance being more stable and stickier compared to BMNR and SBET.

The market has begun to price risks into these assets, resulting in a noticeable gap in performance among various DATs in Q3 compared to BTC or ETH, with the underlying assets outperforming their equity wrappers.

Since the core business model of DATs is to acquire underlying assets, their intrinsic value is difficult to exceed the net value of the assets held. Coupled with ongoing negative operating cash flow, dividend pressures, and rising debt levels, these are the main reasons for the continuous decline in multiples for most DATs.

Before making investment decisions, investors often need to weigh the opportunity cost of capital allocation. The following is a simplified example demonstrating this opportunity cost:

John plans to invest $10,000 and at the end of Q2 chooses to either directly purchase BTC and ETH in the spot market or ETFs, or buy shares of MSTR or SBET.

If John chooses to invest the entire $10,000 in the spot market, he will obtain: approximately 0.093 BTC (based on Q2 closing prices); over 4 ETH (based on Q2 closing prices).

If he instead buys shares of MSTR and SBET, he will acquire: 24.61 shares of MSTR; 1,064.96 shares of SBET (based on June 30 prices).

Multiplying the number of shares by the current corresponding BTC quantity per share, John will hold approximately 0.04 BTC less than if he had directly purchased the spot, and worst of all, he only holds MSTR shares instead of Bitcoin. Similarly, if he buys SBET shares, he will hold a full 1 ETH less than if he had directly purchased the spot.

However, it is worth noting that if John does not sell any shares by the end of Q3, he will make about $8,000 in profit on Sharplink shares, as its stock price rose by 80%, outperforming the returns of the spot and ETFs. On the other hand, his loss on MSTR shares is approximately -20.75%, representing a loss of the original portfolio value.

The opportunity cost of DATs is not only high, but retail investors ultimately cannot truly own the underlying assets. In the event of company bankruptcy, the claims to the underlying assets belong to creditors and preferred shareholders. This raises serious questions about the sustainability of DATs as long-term investment tools.

Nevertheless, there remains a differentiating factor that attracts funds: DATs offer the potential for amplified returns, making them more speculative compared to holding spot or ETFs, as demonstrated by the performance of Sharplink shares from Q2 to Q3.

Although under FASB accounting standards, DATs' income statements may look good (allowing unrealized gains to be counted as profits), these gains are still marked to market and will only convert into free cash flow upon asset sale. In other words, these gains are merely changes in the book value of assets, and unless realized, cannot be converted into actual cash.

Theoretically, if a company can use excess cash for lending or create stable income through options contracts, these issues can be mitigated. However, each protocol integration increases counterparty risks, raising doubts about whether it is worthwhile. The market generally believes that once these companies begin to sell their holdings, it will be a fatal blow to shareholder confidence.

Sustainability Assessment

While there is no perfect set of assessment metrics to address the volatility of digital asset prices, this section will introduce several key indicators for a comprehensive evaluation of DAT performance.

We will use Strategy (MSTR) as an example to illustrate how to conduct assessments and scoring. Each metric's scoring range is from 0 to 5 points:

· Score ≥ 4: The metric performs well

· Score = 3: The metric performs moderately

· Score ≤ 2: The metric performs poorly

· Score = 0: The metric performs extremely poorly

1. Dilution Risk

Dilution risk arises when the issuance of new shares affects the CPS of existing shareholders. If the CPS after issuance is lower than the current CPS, it is dilution; conversely, it is accretion.

The method for assessing dilution risk is to track changes in CPS and compare CPS values before and after financing.

MSTR: Strategy frequently uses ATM equity issuance and convertible bond financing to acquire BTC. Since MSTR typically issues equity when the stock is trading at a premium (mNAV > 1), it can be considered "accretive dilution." However, its reliance on continuous financing makes its dilution risk moderately low. Therefore, we give it a score of 3.

2. Leverage Level

Assessing the leverage level of DATs involves tracking the debt instruments used to purchase digital assets, including convertible bonds, mortgages, or other similar financing methods.

A common metric for measuring leverage is the Debt-to-Equity Ratio, which is used to assess the impact on the company's leverage level during significant pullbacks in treasury assets and whether it may trigger a liquidity crisis.

MSTR: Strategy currently has a debt-to-equity ratio of 0.36, which is at a historical low level, categorizing it as low leverage; thus, we give it a score of 4.

3. Choice of Underlying Asset

The quality of the crypto assets held by DATs is key to whether they can align with investors' interests. Most DATs revolve around blue-chip assets like BTC, ETH, and SOL.

The advantage of ETH lies in its sustainable income-generating ability, which can support company operations or expand treasury size. The CPS is also an important metric. For example, the current annualized yield from staking ETH is about 3%; if a DAT holds $1 billion in ETH, it can earn approximately $30 million in additional income annually just from staking. The company can also choose to participate in more attractive yield opportunities, such as lending or liquidity provision, but this also introduces counterparty risks, which Solana DATs face as well.

In contrast, BTC does not possess active income-generating capabilities; its appeal primarily comes from its positioning as "digital gold"—limited supply and monetary attributes. An increasing number of companies have incorporated BTC into their balance sheets, reflecting its growing importance as an asset.

MSTR: Strategy holds BTC, and while its status as an asset is rising, it currently lacks a substantial income mechanism (which may improve in the future). Therefore, we categorize it as moderate and give it a score of 3.

4. Multiplier to NAV Ratio (mNAV)

mNAV is one of the simplest and most effective indicators for assessing the status of DATs, calculated as the company's market value divided by its treasury asset net value (NAV).

MSTR: Strategy currently has a market value of $82.3 billion, with an NAV of approximately $70 billion, giving a base mNAV of 1.16 and a diluted mNAV of 1.25.

Based on the base mNAV value, we can score according to the following criteria: mNAV > 1.2: score 4 or 5 (good performance); 1.0 < mNAV < 1.2: score 3 (moderate performance); 0.8 < mNAV < 1.0: score 1 or 2 (poor performance); mNAV < 0.8: score 0 (extremely poor performance).

Thus, Strategy receives a score of 3 for this metric.

5. Treasury Transparency and Governance

This is a qualitative indicator used to assess the quality and frequency of a company's disclosures regarding its treasury, reserve proofs, and audit history. Whether public addresses are provided for tracking is also an important reference.

Some companies avoid public addresses due to potential front-running issues: the purchasing behavior of DATs may drive up asset prices, which can then be exploited by the market.

MSTR: Strategy maintains limited transparency regarding reserve proofs and is often criticized by the market. Additionally, its governance structure is relatively complex, involving various instruments such as preferred stock and convertible bonds. Therefore, we give it a score of 2.

6. Liquidity and Cash Runway

This is a quantitative indicator used to analyze the company's current cash flow situation and whether it needs to sell crypto assets to maintain operations in case of problems.

The assessment method is to divide the company's monthly operating expenses by its cash holdings to determine its runway. Having at least a year of cash runway is considered good practice.

MSTR: Strategy currently has cash assets accounting for only 0.07% of the company's total assets, indicating an extremely low cash ratio; thus, we give it a score of 1.

To help readers better understand the overall performance of DATs, we will incorporate the six key indicators into an evaluation chart, including: dilution risk, leverage level, quality of treasury assets, multiplier to NAV (mNAV), transparency and governance, and cash runway.

Remember: the higher the score, the better the DAT performs on that indicator (for example, a higher leverage score indicates lower debt levels and more stable performance).

Using Strategy as an example, its average score across the six dimensions is 2.83 points (out of 5).

Conclusion

The development of DATs in the industry has been quite significant, with a cumulative net asset value (NAV) of approximately $108 billion, accounting for about 2.5% of the total cryptocurrency market capitalization. This figure is already substantial, with the largest participant, Strategy, holding 3% of the global Bitcoin supply. Beyond these numbers, the DAT model itself is also highly attractive, serving as an "asset accumulation tool driven by equity financing," allowing traders and institutions to gain exposure without directly holding or trading crypto assets. Its core logic is to arbitrage using the premiums or discounts of company stocks.

Today, the coverage of DATs has expanded from Bitcoin and Ethereum to other mainstream public chain assets such as @Solana. These newly added assets provide DATs with more leverage opportunities, such as earning yields through DeFi. These yields can be used for company operations or to enhance business metrics. For example, staking ETH can increase the ETH holdings in the company's treasury, thereby enhancing the value of each share of ETH, a metric that investors highly value when evaluating stocks.

The growth of DATs and their key business metrics are highly dependent on the price performance of the digital assets they hold. During periods of increased market volatility, their mNAV may decline significantly.

Ultimately, the surge in the number of DATs and NAV also reflects the growing interest of institutions and retail investors in digital assets, which is a positive signal for the entire industry. However, any investor participating in such assets should fully understand their potential risks, as outlined in this report. ```