There’s a playbook in crypto corporate finance that goes something like this: raise cash through aggressive equity deals, use the cash to buy Bitcoin, watch your stock price climb as Bitcoin climbs, repeat. It worked beautifully for Strategy, formerly MicroStrategy, which now holds more than 650,000 BTC. Since April 2025, over 40 digital asset treasury companies have raised more than $15 billion through private investments in public equity, known as PIPEs. And roughly 80% of those firms are now trading below their net asset value, with some at discounts exceeding 90%.

The mechanics of the cash grab

Here’s how these deals typically work. A public company sells shares, often at a discount, to institutional investors through a PIPE. The company takes the cash and buys Bitcoin or other digital assets. PIPEs aren’t the only tool in the kit. At-the-market (ATM) offerings, where companies sell shares directly into the open market at prevailing prices, and convertible notes, which are debt instruments that can be converted into equity later, round out the financing trifecta. All three share a common trait: they dilute existing shareholders.

KindlyMD, which later merged with Nakamoto Holdings, offers a case study in how this can go sideways. The company raised approximately $763 million in 2025, with over $540 million coming through PIPEs alone. The result was a share price decline of up to 60%, driven largely by dilution concerns.

The NAV premium problem

By late 2025, a drastic compression in NAV premiums was reported across the sector. When around 80% of digital asset treasury companies trade below the value of their underlying holdings, the math breaks down entirely. Issuing new shares at prices below NAV to buy more crypto actually destroys value for existing shareholders rather than creating it.

The pivot to altcoins

As Bitcoin-focused treasury strategies have become crowded, a growing number of firms have begun diversifying into alternative tokens. Ethereum, Solana, and various smaller tokens are now showing up on corporate balance sheets funded by equity raises. A company that issues shares to buy SOL or a fringe token is essentially asking shareholders to take on amplified risk at both ends: the equity is dilutive, and the asset being purchased can swing 20% in a day without breaking a sweat.

What this means for investors

Regulatory scrutiny is intensifying around these treasury strategies. Potential insider trading behaviors linked to the timing and disclosure of large crypto purchases have drawn attention from regulators. When a company announces a PIPE deal and simultaneously executes large token purchases, the information asymmetry between insiders and public shareholders becomes a real concern.

For investors evaluating crypto treasury stocks, the key metric to watch is the NAV premium or discount. A company trading at a 50% discount to the crypto on its balance sheet is telling you something important: the market doesn’t believe management is adding value through the equity-to-crypto conversion process.