Bitcoin or bust
Since May a dozen London-listed companies, including a firm that produces helium and a biotech developing devices for spinal surgery, have begun converting cash reserves into bitcoin.
So what? So-called "crypto treasuries" are the latest financial experiment. They're a sign that Trump-era fervour is spilling over to the UK and rewiring struggling businesses. On paper it looks like a clever way for loss-making companies, many of them SMEs, to rally their share prices and attract investor attention. In practice, it's a speculative gamble that
- creates exit ramps for insiders looking to cash out;
- echoes past bubbles, from dotcom hype to the memestock mania; and
- raises systemic risks as more firms move from tangible products to bitcoin.
How it works. The first crypto treasury was Strategy (formerly Microstrategy), a data firm that began to invest heavily in bitcoin in 2020. Five years on, Strategy is the world's largest holder of the cryptocurrency, with 629,376 bitcoins worth $71 billion and equivalent to 3 per cent of the total supply. Strategy's current market cap is $96 billion, up from less than $1 billion in 2020.
Crypto king. Strategy is now a business intelligence firm in name only. It's a proxy for bitcoin investment, with a share price that often moves in tandem with the price of the cryptocurrency.
It works for investors because they gain indirect exposure to bitcoin by buying shares in Strategy, which (unlike bitcoin) trades as a public security. This comes with regulatory protections and easier portfolio integration. "Some institutional investors for instance might not be able to buy bitcoin directly, perhaps because of their own investment mandate or because of restrictions applied by regulators," said Laith Khalaf from AJ Bell.
It works for Strategy because its market cap is about 30 per cent greater than the value of the bitcoins it holds. In other words the US public stock market is, for reasons that baffle many analysts, willing to pay a premium for crypto. Strategy takes advantage of the difference.
Copycats. The market hack has inspired a number of imitators, mostly based in the US, including
- GameStop, the electronics retailer that shot to fame in 2021 when it became a memestock after Reddit traders sent its price soaring;
- Metaplanet, a struggling Japanese investment firm turned hotel operator, which now calls itself "Asia's Microstrategy"; and
- Trump Media & Technology Group, the company behind the social media site Truth Social and controlled by the US president's family, which said it plans to raise $2.5 billion to buy cryptocurrencies.
A total of 169 publicly traded companies hold bitcoin, including about a dozen that are bitcoin miners and exchanges.
In the UK, the crypto treasury trend is nascent. The dozen companies embarking on this strategy are mostly lossmakers listed on the Aquis Stock Exchange, which caters to microcaps and high-risk ventures that can't meet the stricter requirements of the London Stock Exchange.
The opportunity. Unlike the US, where bitcoin exchange-traded funds now trade on the stock exchange, regulation in the UK makes buying and holding cryptocurrencies difficult. Some see this as an opportunity for crypto treasuries to thrive. The Smarter Web Company, a website design agency founded in Guildford in 2009, became a tech unicorn last month after purchasing $271 million worth of bitcoin and seeing its stock surge sixfold in two weeks.
TruSpine, a biotech company developing devices for spinal surgery, is the latest UK business to want in on the craze. In a note to shareholders last June, the company said it would hire an advisory firm to support the implementation of a new bitcoin treasury policy.
Dark past. The company, which has never brought a product to market in eleven years, has a history of substantial losses, financial mismanagement and investor mistrust. In 2023, Aquis fined TruSpine £215,000 after it omitted information about its assets and gave the market a distorted view of the company's financial health. The fine was later partly suspended on the condition that TruSpine does not break Aquis rules over the following three years.
Turnaround. Geoff Miller, appointed Chairman of TruSpine in 2024, acknowledged the company's "sketchy history" in an interview with The Observer. He thinks the bitcoin treasury strategy represents an opportunity to turn the company around. Unlike Strategy, he hopes to reinvest any money earned from the company's bitcoin holdings in TruSpine's spinal technology.
Miller hopes to offer investors a way to stay exposed to bitcoin while holding equity in a business that could generate non-crypto returns. "The dynamics have changed significantly with the Trump administration coming in," he said. "We're now in a position where you can't ignore bitcoin."
And yet... "My suspicion is that there will be some people who make a lot of money from this," Khalaf said in reference to the broader trend of crypto treasuries. But he warns that the price of bitcoin is volatile. When companies borrow money to buy crypto, a sudden price drop could force them all to sell at once, creating a chain reaction that destabilises markets. "I suspect the downdraft when it comes could be pretty brutal," he said.
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