Crypto treasury companies: how Strategy works
MicroStrategy, now Strategy, holds bitcoin as its main treasury asset. Its stock offers bitcoin exposure, but it is not bitcoin itself, often at a premium.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
A cryptocurrency treasury company is a public company that holds crypto on its balance sheet. Strategy, the software firm formerly called MicroStrategy, is the best-known example.
How does a crypto treasury company work?
A crypto treasury company raises money and buys bitcoin. Strategy uses cash from its software business, money from selling new shares, and convertible debt. Convertible debt is a loan that can later turn into shares.
Why do investors buy its stock?
Strategy stock lets investors get bitcoin exposure through a regular brokerage account. You buy it like any other publicly traded stock.
- You avoid opening a crypto exchange account.
- You get bitcoin exposure mixed with the software business.
- You own company equity, not bitcoin itself.
What risks come with this model?
Strategy shares often trade above or below the value of the bitcoin the company holds. Convertible debt adds leverage, which can force share dilution or asset sales if the company needs cash.
How is it different from a bitcoin ETF?
A spot bitcoin ETF holds bitcoin directly and tracks its price. Strategy is a software company that holds bitcoin and uses debt. When you buy the stock, you buy shares in that company.
Frequently asked questions
MicroStrategy has not paid a regular cash dividend on its common stock. Any dividend would depend on its board and the terms of any preferred shares.
Often yes. Many brokers allow it in an IRA. A workplace plan depends on its menu.
The bitcoin it holds drops in value. The stock often falls more because of the convertible debt. The company may sell bitcoin or issue shares.
The stock reflects the bitcoin it holds plus the software business, debt, and investor demand. Its price can swing more than bitcoin itself.
