The story of “coin stocks”: who is paying the bill?

The stock market and the cryptocurrency market, once mutually exclusive, have finally transitioned from a bitter rivalry to a warm relationship. A few years ago, the mainstream stock market's view of the cryptocurrency market would have been met with scant praise; a bland "go your separate ways" would have been considered respectful. Forces operate mutually, and the cryptocurrency market's repulsion of the stock market is palpable. Most in the cryptocurrency community believe the high-handed stock market has no merit, a zero-sum game. Who is superior? But this year, the two groups have unexpectedly met, grown to know each other, and fallen in love, quickly reaching a point of convergence. Thus, the fruit of this love affair, the cryptocurrency-stock market, was born. Unlike the tokenization of US stocks, which aims to move US stocks onto blockchain, coin-share companies have successfully packaged tokens as stocks, using backdoor listings to transform themselves into backdoor listings. The narrative of capital remains the same. However, this time, it's not the crypto community itself that foots the bill, but the stockholders who once looked on from afar. 01 What are coin-shares? While a universal definition is difficult to come by, coin-share companies are generally defined as listed companies that establish internal reserves of one or more cryptocurrencies and bring cryptocurrencies onto their balance sheets. Coin-share companies can be categorized into different categories based on different criteria, including three: by crypto treasury currency, by business model, and by the underlying structure of coin-shares. Let's start with crypto treasuries. A crypto treasury refers to an investment model where a company reserves a specific cryptocurrency. Initially, there were only Bitcoin treasury companies, followed by the rise of ETH. Now, with regulatory relaxation, a wide range of altcoins and stocks have emerged, including SOL, BNB, Hyper, XRP, and DOGE. According to data, there are currently 166 Bitcoin treasury companies and 72 Ethereum treasury companies. Altcoin companies are relatively limited. For example, only three relatively well-known SOL treasury companies are DeFi Development, Upexi, and Sol Strategies. BNB started even later, with only one official orthodox treasury company, VAPE. Of all the cryptocurrency stocks, Strategy is undoubtedly the most recognizable. Having begun its investment in 2020, Strategy has capitalized on Bitcoin's momentum, successfully surging from a near-bankrupt company with a share price of just $16 to a Nasdaq-100 company with a market capitalization of $111.83 billion, demonstrating its success in the market. From a strategic perspective, the core of most treasury companies lies in market capitalization premium. For example, Strategy's valuation model relies on the market capitalization premium rate. It uses equity dilution financing to increase its BTC holdings, thereby boosting its per-share BTC holdings and driving up its market capitalization. Simply put, this involves designing a ratio between equity and Bitcoin, using bonds and stock sales to purchase Bitcoin, and then capitalizing on Bitcoin's appreciation, ultimately creating a positive flywheel. As of August 10, 2025, Strategy had acquired 628,946 bitcoins at an average price of approximately $73,288, with a total holding value of approximately $46.09 billion. Based on a bitcoin price of $119,000, this holding is worth over $74.8 billion, making it the largest publicly traded company in the world in terms of bitcoin holdings. 02 How does it work? Why do investors accept or even default to the existence of a premium? First, market expectations for cryptocurrencies are crucial. Market optimism about the future of cryptocurrencies is the driving force behind their willingness to pay a premium. Second, the emergence of treasuries effectively addresses the needs of investors who, for various reasons, cannot directly access cryptocurrencies but still desire to profit. These groups include, but are not limited to, outsiders unfamiliar with the cryptocurrency market, certain regulated institutions, funds, and legal entities. In other words, treasuries lower the investment threshold for participants, leading them to be willing to pay a certain "compliance" premium. Of course, this premium is also based on the continued appreciation of cryptocurrencies. More importantly, treasury companies utilize a unique leveraged operating model. They typically raise large amounts of capital at extremely low interest rates, enabling them to further expand their acquisitions and providing strong resilience even in market downturns. According to data from crypto consulting firm Architect Partners, US-listed companies have announced plans to raise over $91 billion to purchase cryptocurrencies so far this year. Where does the money come from? Looking at current crypto vault companies, the four main methods of raising capital are PIPE (private equity offering), ATM (at-market capital raising), CB (issuance of convertible corporate bonds), and SPAC (merger and acquisition listing). Private equity involves the private sale of financial products to specific investors through brokers or over-the-counter platforms, bypassing the public market to quickly recover funds. ATM involves issuing additional shares and then selling them in the public market for cash at the current market price. This typically involves a longer period of time and relatively flexible operations. Convertible corporate bonds are more "cunning," as companies borrow money from the market, but this money can be converted into cash or company stock in the future, which can create a longer period of selling pressure. SPACs are relatively well-known, raising funds through backdoor listings. Strategy, a leader in fundraising capabilities, initially focused on issuing convertible corporate bonds for fundraising, but in recent years, with its stock price skyrocketing, at-market capital raising has become its primary method.

Back to the business model, there are two types of business models for coin-stock companies. One type follows Strategy, with coin hoarding as its main business, and realizes capital appreciation through premium. In other words, crypto reserve is the business model. Due to the relatively low entry threshold, this category has attracted many copycat companies; the other type is relatively rational, adding a treasury segment on the basis of the original business, making cryptocurrency a supplement to the business. This type of coin-stock is especially dominated by Ethereum treasury companies. The reason is that compared with Bitcoin's value storage, Ethereum also has the basic function of staking and earning interest. In fact, the categorization based on the main body also focuses on Ethereum treasury companies. Within Ethereum treasuries, they can be divided into native players, exemplified by SharpLink, and Wall Street players, exemplified by BitMine. The difference between the two lies in their respective holders. SharpLink's shareholders encompass virtually the entire Ethereum ecosystem, including native giants like ConsenSys, infrastructure providers like Pantera, and Arrington, as well as Ethereum derivative asset operators like GSR and Ondo Finance. Its holders are considered native OGs. BitMine, on the other hand, is a product of Wall Street, with mainstream US-listed investors like Galaxy Digital, ARK Invest, and Founders Fund as its core constituents. Currently, the ETH arms race between the two is intensifying. BitMine, with its more aggressive capitalization and CEO's skillful storytelling, is far ahead, successfully raising 83,313 ETH in 35 days, surpassing SharpLink's 280,706, becoming the world's largest Ethereum treasury. 03 Will the fate of altcoins repeat itself in crypto-to-equity? The most direct reason for the surge in crypto-to-equity is clearly not simply a desire to support cryptocurrencies. Regardless of how much they verbally promote decentralization or pull out new narratives like cryptocurrency valuation anchors and digital gold, the fundamental concern of these companies remains the unvarnished profit factor. Among the hundreds of crypto-to-equity companies, many are chasing hot spots. The feedback from these hot topics is indeed very timely. Almost all cryptocurrency-related companies experience rapid and substantial price increases after officially announcing their participation in the market. Case studies abound. After announcing its treasury strategy on May 27th, SharpLink's stock price surged 433.18% that day, reaching $124.12 on May 30th, a more than 24-fold increase from its previous low of $5. BitMine's stock price was $4.26 on June 27th, and on July 3rd, it reached a high of $135. Compared to the two aforementioned large holders, small-cap stocks have also seen significant short-term gains. H100 Group, a Swedish biotech company on the verge of bankruptcy, saw its stock price surge 15-fold within the month after announcing its support for Bitcoin Vault. Bluebird Mining Ventures recovered fourfold its share price through its Bitcoin reserves. Looking at the current situation, after nearly two months of FOMO, the craze for cryptocurrency stocks is cooling. For example, Strategy, the largest Bitcoin treasury, has seen its market capitalization premium drop from a peak of 2x to 1.49x. BitMine, which recently became the largest buyer of ETH, has also seen its share price drop from a peak of $135 to $62.44 today. Notably, ETH is still on the rise, having already surpassed $4,600 today. Interestingly, the performance of cryptocurrency stocks closely mirrors the overall crypto market. Similar to the growth of altcoins, cryptocurrency stocks are showing a polarized pattern. Data from Architect Partners shows that cryptocurrency treasury stocks holding mainstream tokens like Bitcoin, Ethereum, or Solana have achieved a median return of 92.8% since announcing their holdings. In contrast, crypto treasury stocks investing in altcoins have seen a median return of negative 24% since their announcement. Looking at the most intuitive market data, the share prices of nearly all altcoin stocks have halved since their peak. For example, Hyperion DeFi, which reserves Hyperliquid, has seen its share price plummet 62% since its rebranding to HYPD and ticker symbol change on July 2nd. The nightmare of the altcoin market appears to be repeating itself in crypto-to-equity companies. The performance of altcoins is being transmitted to crypto-to-equity companies. Due to the leverage effect, when prices underperform, the chain reaction is even greater, leaving investors who bought at high prices helplessly on the sidelines. Objectively speaking, this isn't limited to altcoins. With the nexus between the cryptocurrency and stock markets, the impact of both is further amplified. The emergence of crypto-to-equity has essentially created a new narrative. For project developers, the presence of coin-share companies not only provides buying support, helping to stabilize prices, but also serves as a marketing tool to boost token awareness. Furthermore, projects can even manage prices through their own treasuries, leveraging them to influence both sides of the market through unilateral price manipulation—commonly known as "stepping on one foot for the other." Under optimistic circumstances, this dual strategy of pumping up prices and selling off tokens is a vivid example of this dynamic in Ethereum. The FOMO (Fear of Momentum) generated by large institutional purchases sent ETH soaring 58% in a single month. Perhaps driven by this consideration, the number of treasury partnerships between foundations and companies is increasing. For example, Mill City Ventures III, which launched the SUI treasury, has a funding partnership with the SUI Foundation. For many companies, coin-shares are not only a strategic transformation strategy but also a practical means of achieving rapid profitability and revitalizing their business, or even simply opening up new business segments. This long-term, attention-grabbing opportunity is difficult to abandon. From an investor's perspective, crypto-equity investments allow them to bypass complex wallet operations and compliance requirements, creating a new way to generate wealth in the cryptocurrency space, diversifying their portfolios and generating higher profits. However, these investments are not without negative implications. Currently, the core of a treasury lies in the value and long-term trends of cryptocurrencies themselves. Therefore, aside from Bitcoin, which has been embraced by institutions, other cryptocurrencies, including Ethereum, lack relative certainty. Once a downturn enters, with a sharp drop in market prices, crypto-equity companies will experience a "Davis double whammy" situation: falling coin prices lead to falling stock prices, and selling coins leads to further price drops. This is especially true since most crypto-equity investments involve borrowing money to buy cryptocurrencies, posing a significant risk. Following the introduction of cryptocurrencies, the primary challenge for crypto-equity investors is facing increased volatility. After all, the volatility of tokens is far more thrilling than a roller coaster ride. Overall, while cryptocurrency stocks continue to thrive, the long-term prospects for most companies are uncertain. This is especially true for altcoin-focused stocks, which face significant challenges as the altcoin season struggles to reappear. From a market perspective, among mainstream cryptocurrencies, leading companies with the highest market capitalizations are expected to reap the lion's share of industry dividends, creating a winner-takes-all landscape. Altcoins, on the other hand, are more reliant on the project owners' ability to connect with resources. Stocks with direct official involvement or backed by resources hold a certain positive outlook. However, one thing is certain: most companies currently rushing into the market will inevitably face a thorough cleanup at some point. For the average crypto investor, buying cryptocurrencies directly may be the best option, rather than the vague prospect of buying stocks to try out new products.