The mNAV Trap: Why 70% Discounts Aren't Bargains

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Each Monday, you'll receive a quick blast on the top buyers over the last week. We'll follow that up every Friday with digest and analysis. Enjoy!

Stacking Sats Inc. 

Official IT partner at BitcoinTreasuries, Stacking Sats Inc via its subsidiary, Framework IT, is a managed IT services firm with a 17-year track record of providing best-in-class IT support, strategy, and cybersecurity, boasting high recurring revenue and long-term client contracts. It’s also one of the top 20 holders of Bitcoin among global private companies.

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Why Treasury "Discounts" Are Actually Warning Signs

Companies trading at 0.50x to 0.90x mNAV look like compelling opportunities — theoretically offering Bitcoin at 10% to 50% discounts to spot prices. 

Strategy at 0.88x, Twenty One Capital at 0.81x, and Semler Scientific at 0.78x create what appears to be a pretty straightforward arbitrage opportunity. Investors buy discounted Bitcoin through equities, wait for the discount to compress toward premiums, then ultimately profit from the re-rating as management executes.

At first, the math seems simple. A company at 0.70x mNAV lets you buy $1 of Bitcoin for $0.70 — a 30% discount. If the discount compresses to 0.90x, you capture 28% gains independent of Bitcoin’s price movement. If it re-rates to a 1.20x premium, you’re up 71%.

Except 2025 proved these discounts aren’t temporary mispricings — they’re persistent valuations reflecting structural challenges that often deepen quicker than they resolve.

Times, indeed, are dire for the treasury trade, despite adding 30,000 Bitcoin to their balance sheets in December (although the bulk of that came from Strategy). Nearly 40% of Bitcoin treasuries now trade below 1.0x NAV, and more than 60% are underwater on their latest purchases. 

Understanding why requires abandoning the assumption that sub-1.0x mNAV represents market inefficiency.

The Governance Gap

Investors that see Strategy at 0.89x or Twenty One Capital at 0.81x might naturally ask: Why don’t shareholders force companies to narrow discounts through buybacks or capital returns? 

Not so fast. Corporate governance structures prevent minority shareholders from compelling asset sales regardless of how extreme a discount might become.

Management and boards control decisions, not dispersed equity holders. Even large institutional investors typically lack voting power to force specific actions. This creates asymmetric risk. You’re betting management will voluntarily take actions that narrow spreads — buybacks at 0.70x to 0.80x, operational improvements, and, importantly, transparent communication.

But if management decides to continue issuing dilutive equity or pursuing value-destructive strategies, shareholders have no mechanism to force course correction. The “discount” persists because it reflects this governance reality.

Strategy is an example of how governance shapes outcomes at scale. The company trades at 0.89x despite $60 billion in Bitcoin and systematic accumulation. Shareholders accept this because Michael Saylor’s control enabled the treasury model., even if that same concentration eliminates shareholder recourse if strategies shift.

Secure Digital Markets

Secure Digital Markets (SDM) provides unparalleled liquidity, execution speed, and bespoke customer service, making it the top choice for institutional investors seeking reliable digital asset trading solutions. With deep expertise in capital markets and strict regulatory standards, SDM stands out as the premier platform for all digital asset treasury teams looking to optimize their trading and treasury operations.

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Dilution math

Companies at 0.70x to 0.90x mNAV face progressively difficult mathematics when raising capital. 

A company at 0.70x issuing $10 million must sell shares representing $14.3 million in Bitcoin NAV. Even buying Bitcoin with proceeds destroys value: shareholders gave up $14.3 million to acquire $10 million — a 30% loss.

This creates a doom loop where companies need capital to justify treasury strategies, but every sub-1.0x raise dilutes per-share holdings and validates market skepticism. Sophisticated investors might even sell into issuance announcements, driving mNAV lower. What begins at 0.80x becomes 0.70x after dilutive raises, then 0.60x as confidence evaporates.

Strategy at 0.88x demonstrates that scale provides partial immunity. The company continues issuing despite an 11% discount because institutional relationships and the company’s daily $2 billion volume creates investor acceptance — or reluctance. A $500 million raise at 0.89x represents less than 1% treasury dilution.

Yet smaller treasuries attempting the same at 0.70x to 0.80x face 5-10% dilution per raise, quickly destroying per-share value.

It’s a trap

Meanwhile, Bitcoin rallies create counterintuitive problems for discounted treasuries. 

If Bitcoin rises 10% but a stock only rises 5%, mNAV actually falls despite both appreciating. Let’s say a company holding 10,000 BTC sees holdings increase from $900 million to $990 million (10% gain) when Bitcoin rallies to $99,000 from $90,000.

But if the stock only rises 5%, then the market cap increases to $756 million from $720 million. Basically, mNAV drops to 0.76x from 0.80x — the discount widened from 20% to 24% despite the rally.

As premiums compress toward parity or flip to discounts, companies run into challenges when justifying the issuance of new shares that are often economically dilutive on a per-NAV basis.

For mNAV to improve during rallies, stocks must outperform Bitcoin itself — requiring investor confidence that companies can accumulate without destroying value. Many at 0.70x to 0.90x lost that confidence through buying Bitcoin above $100,000, PIPE financings that crushed shareholders, or failed communication.

When Bitcoin surges, Strategy's stock typically outperforms as investors fund additional accumulation. Weaker treasuries see stocks lag, compressing mNAVs further and eliminating their ability to raise capital accretively. The rally that should help actually accelerates bifurcation.

While 0.50x to 0.90x represents genuine ambiguity, the sub-0.50x cohort shows where discounts end up when credibility evaporates. CIMG at 0.26x, NAKA at 0.47x, Cango at 0.40x aren’t mispricings — they’re markets pricing high probabilities of an eventual Bitcoin liquidation. These extreme discounts warn what happens when companies in the 0.70x-0.90x range execute poorly.

Two roads

The sector is quickly splitting into winners and losers with a shrinking middle ground. 

Strategy at 0.88x issues hundreds of millions and finds buyers because $60 billion creates pricing power that $100 to $500 million holdings cannot replicate.

Meanwhile, treasuries in the 0.50x-0.90x range face binary outcomes. Either execute flawlessly to rebuild confidence and compress discounts toward 1.0x, or slide toward sub-0.50x where recovery becomes increasingly more challenging. Twenty One, led by Jack Mallers, an entrepreneur quite adept at building cash-flow businesses, at 0.81x has credible management pursuing the goal of Bitcoin businesses that generate revenue. 

Building operational businesses — neo banks, lending platforms, revenue generators — could justify valuations above NAV but simultaneously contradict the “pure-play treasury” pitch. Pivoting from “we’re a treasury” to “we’re building a business” may be necessary yet it also could represent an admission that the previous model failed.

Shareholders remain structurally dependent on management decisions they cannot control, capital raising that often destroys value, and sentiment that may never return. For all but a handful with scale and institutional support, trading below 1.0x doesn’t necessarily represent an opportunity but might instead be a stark warning that the pure-play model is failing in real-time.

Special thanks to our partners:

• AnchorWatch. AnchorWatch makes Bitcoin ownership safer and easier by combining advanced custody expertise with industry-grade insurance. As a Lloyd’s of London Coverholder, it writes specialized policies that address digital-asset risks, giving clients trusted coverage and peace of mind. Learn more: AnchorWatch

• Arch Lending. Get instant, secure loans backed by your Bitcoin, Ethereum, or Solana—no need to sell your assets. Arch Lending offers fast approvals and trusted custody for both individuals and institutions. Learn more: Arch Lending

• Cadena Bitcoin. A p2p bitcoin lending marketplace with a unique emphasis on working with treasury firms and businesses, as well as the savvy bitcoin-native investors who visit our website. Learn more: Cadena Bitcoin

• Coinkite. Coinkite is a leader in security and hardware manufacturing and the maker of some of the most iconic Bitcoin products, such as OPENDIME, COLDCARD, BLOCKCLOCK, SATSCARD, TAPSIGNER and SATSCHIP. Learn more: Coinkite

• Cryptio. Cryptio is an enterprise-grade accounting software platform built specifically for digital assets and cryptocurrencies. It enables businesses to transform blockchain transaction data from multiple exchanges and custodians into auditable financial records, supporting compliance with GAAP and IFRS standards. Learn more: Cryptio

• The Hemisphere Foundation. Hemisphere develops open-source solutions designed to help treasury teams securely manage, deploy, and optimize their BTC holdings, with benefits of self-custody and Bitcoin native deployment. Learn more: The Hemisphere Foundation

• Orange Wheel Advisors. Orange Wheel Advisors is a strategic consulting firm that helps companies navigate Bitcoin’s impact on corporate finance and competitive strategy. With expertise spanning treasury management, payments, capital structure, mining, and investor communications, they provide executive education, tailored strategies, and execution support to guide businesses through the global monetary transition. Learn more: Orange Wheel Advisors

• o21 Solutions. o21 develops and implements Bitcoin-powered corporate strategy, transforming value chains with strategic expertise and tailored advisory services, with a focus on both Treasury and Operations - balance sheet accumulation, mining, and payments. Reduce cycle time through the corporate Bitcoin adoption journey through our pre-packaged or tailored engagements. Learn more: o21 Solutions

• Psalion. Psalion is a Bitcoin and digital-asset yield manager that offers institutional‑style investment strategies to professional investors, family offices, corporates, and private clients via separately managed accounts and yield funds. Learn more: Psalion

• Secure Digital Markets (SDM) provides unparalleled liquidity, execution speed, and bespoke customer service, making it the top choice for institutional investors seeking reliable digital asset trading solutions. With deep expertise in capital markets and strict regulatory standards, SDM stands out as the premier platform for all digital asset treasury teams looking to optimize their trading and treasury operations. Learn more: Secure Digital Markets (SDM)

• Stacking Sats Inc. Official IT partner at BitcoinTreasuries, Stacking Sats Inc via its subsidiary, Framework IT, is a managed IT services firm with a 17-year track record of providing best-in-class IT support, strategy, and cybersecurity, boasting high recurring revenue and long-term client contracts. It’s also one of the top 20 holders of Bitcoin among global private companies. Learn more: Stacking Sats Inc

• XCE. An executive recruitment group that combines a profitable recruitment business with a Bitcoin treasury strategy. The company turns over a decade of executive recruitment experience and four years of Bitcoin accumulation into a public Bitcoin‑powered growth engine, using a proven operating business to drive Bitcoin treasury accumulation. Learn more: XCE

• Zaprite. Zaprite is a non-custodial payment platform that allows individuals and businesses to seamlessly accept both bitcoin (on-chain and lightning) and fiat payments in a unified, customizable checkout experience. Users can easily issue invoices, generate payment links, and connect multiple wallets or custodial accounts, all while handling their own funds directly. Learn more: Zaprite

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