Bitcoin Treasury Policy companies - Can anything pop this bubble?
Many of us have noticed the recent proliferation of companies with a “Bitcoin Treasury policy”.
Your views on this may flow naturally from your view of Bitcoin: is it a superior currency, a store of value, a high-quality digital asset?
If so, then perhaps it makes sense for listed companies to allocate some of their surplus funds to Bitcoin.
However, what is less intuitive is that listed companies would raise money specifically for the purpose of buying Bitcoin rather than, say, investing in their core business.
That doesn’t sound like something that would happen in a normal market environment, with businesses raising funds in order to grow or expand. It sounds highly abnormal. Sort of like raising fresh equity in order to buy gold bars, or Swiss francs.
It sounds like something that would happen in a highly unusual market environment, and that’s what we’ve got right now.
For starters, the Bitcoin price is up over 70% against the pound over the past year:
With the 5-year return on bitcoin fast approaching 1000%, investors are understandably scrambling to get a piece of the action.
However, the FCA banned crypto-linked exchange-traded notes several years ago. They did this presumably with the intention to protect investors from excessive risk and losses.
In a sign of the times, the FCA is now proposing to lift this ban.
The executive director of payments and digital Finance is quoted as saying:
‘This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.’
Fair enough.
However, the FCA’s ban on exchange-traded crypto notes has clearly not prevented investors from getting their hands on crypto-linked stock market investments.
Step forward the Bitcoin Treasury companies. I'd like to profile three of the most interesting.
Smarter Web (OFEX:SWC)
- Exchange: Aquis
- Share price: 222p
- Shares outstanding: 265.6 million (18th July RNS), regularly increasing.
- Market cap: £589m based on a 265.6m share count.
It can be tricky to get a firm view on the market cap here, as the share count is regularly increasing. There is an ongoing subscription agreement, and the company says it will provide an update on the amounts raised every 2 weeks.
I don’t blame the company for raising funds as regularly as it does. It’s entirely rational!
The stock only listed in April, at the humble price of 2.5p, raising £1.1m.
For the avoidance of doubt, this is a web design, web development and online marketing services company, according to its own self-description.
The admission document is dated April 2025. In the key risks section, under “Competitor Risk”, it notes that “there are many companies currently developing AI software”.
But the company’s historical financial statements are for a company called “Uranium Energy Exploration Plc”, which was its previous name. The admission document notes that “the Board’s plan to list a uranium exploration focused entity on the AIM Segment of the London Stock Exchange was abandoned”.
In summary: this was supposed to be a uranium play, and then it became an AI play, and then it became a bitcoin play with a web design company attached to it.
According to the latest RNS (30th July), the company has 2,050 bitcoin. At the latest bitcoin price, this is worth c. £182m.
While its Bitcoin policy is described as a “Treasury policy”, this implies that there are other corporate activities that the Bitcoin policy is supposed to fund. However, I’m not convinced that its other corporate activities are currently of much significance.
With a market cap in excess of three times the value of its bitcoin holdings, I agree that it's rational for the company to continue raising as much money as it possibly can. Because if you could sell £1 for £3, when would you stop? If the only goal is enrichment, the correct answer is never.
London BTC (LON:BTC)
- Exchange: LSE Main Market
- Share price: 7.16p
- Shares outstanding: 347 million
- Market cap: £25m
Until 3rd July, this was known as "Vinanz". It has since changed its name to “London BTC Company Limited”.
Between the ticker and its new name, it’s clear enough what this company’s angle is.
It’s a David Lenigas stock - Mr. Lenigas is well known in the UK market for his involvement in promotional oil and gas companies.
It describes itself as a “Bitcoin treasury company with active mining operations across the United States and Canada”, and in that sense can be seen as the successor to Argo Blockchain (LON:ARB).
According to a 21st July RNS, it owns 20.94 bitcoin. These are worth c. £2m at current prices.
It also owns a few bitcoin miners, but I don’t think they come anywhere close to bridging the gap between the company’s bitcoin holdings and its market cap. In percentage terms, I expect that this one is significantly more overvalued than SWC.
Satsuma Technology (LON:SATS)
- Exchange: LSE Main Market
- Share price: 5.85p
- Shares outstanding: 492 million
- Market cap: £29m
In what might be called a pattern, this is another Bitcoin treasury company that has recently changed its name. It was “Tao Alpha PLC” until 14th July, when it became “Satsuma Technology PLC”.
And in an arrangement that I consider highly unusual, the company has “launched a private offering of a secured convertible loan note for no less than £100 million”, which has been made available to US investors.
These notes allow for automatic conversion into ordinary shares if shareholders approve such a conversion. But I'm not sure they'll have much of a choice in practical terms.
The conversion price? 1p.
That means 10 billion new shares potentially hitting the market.
The notes mature around the end of March 2026, if they have not been converted by that time.
Unless I’m missing something, this implies an extreme level of dilution.
The company has made one purchase under its Bitcoin treasury strategy so far, acquiring £2.5m of bitcoin.
It does have some other operations: it “provides subnet infrastructure and develops revenue generating AI agents to power the next generation of decentralized AI services”. But FY Feb 2025 accounts show zero revenues.
Some back-of-the-envelope figures: the market cap at the current share price, based on all of the new shares that could be issued, is over £600m. The company will at least receive £100m from the issuance of the convertible note. But this still makes it even more overvalued than SWC.
There are plenty of other companies jumping onto the Bitcoin treasury policy bandwagon - keep an eye out for them.
In terms of the colour coding system we use in our daily reports, I am automatically putting a RED onto any company with a Bitcoin treasury policy, as I assume that they are using an excessive valuation to raise money (or if they aren’t yet, it is something that they are hoping to do).
No matter what happens to the Bitcoin price from here, I hope we can all agree that a simple Bitcoin-linked note would be a far more straightforward way to invest, rather than getting involved with the “Bitcoin treasury policy” companies! And perhaps the emergence of such a simple instrument with a UK listing might be just what the market needs to take the air out of this bubble.
Disclaimer
This is not financial advice. Our content is intended to be used and must be used for information and education purposes only. Please read our disclaimer and terms and conditions to understand our obligations.
21 comments
Great article Graham. I agree.
I'm constantly amazed by people who have an opinion on BTC without going to first principles or to source. The post GFC 2009 satoshi paper is eye opening. https://bitcoin.org/bitcoin.pd... And obviously the cypher punks and libertarians have a point. devaluing FIAT and hyperinflation is a bad thing. IF it happens to you. No one else can understand.
That said I think BTC has become the ultimate story stock. It's clearly not a peer to peer currency as intended , (but it does have as much 'money' legitimacy as cowrie shells or tang dynasty flying cash...) Neither is it a store of value like gold. It's way too volatile to be called a blue chip (+/- 10% annual volatility compared with at least 5 x 80% collapses)
So what is it? Whatever your opinion - it is a great idea. It's a great idea to have currency creation outside the control of political central banks (Argentina? Venezuela? Wiemar? Zim?) but pretty hard to collect taxes with anonymous transactions.(this is where the libertarian/cult arguement falls apart) But of course if you understand any cryptography or PKI you know that all transactions are 100% traceable. Tracing crypto is an industry in itself. The only challenge in finding silk road Dread Ross Ulbright was getting the four digit pin for his lap top. So anonymity is another straw man argument. Lets not even start on criminality. If you want to be anonymous use cash. You can easily fit a $1M in carry on luggage and still have room for a toblerone.
So again- what actually is it.? a bubble? Clearly tulip comparisons are lazy (small /localised/ short lived/agricultural) Railway/Canal booms are better comparisons. the ICO mania in 2017 ended with 4000 tokenised coins. 3000 never wrote a line of code. But then again 80% of new railway companies never built anything either. Plus ca change.
But still if 90% of all exchange BTC transactions today are Perps future trading then what on earth is going on? Poor old peer to peer satoshi would be spinning in his grave to see crypto whales trading perps.
My theory is that no one knows what is going on. Everyone is blind and holding a different part of the elephant. People are acting on the individual level to create something bizarre at the emergent collective level. And then the pundits pitch in. Usually shilling something -if only of course themselves.
Tech revolutions take about 70 years to play out. The missing layer for the computing revolution was always the payment layer. There were literally 100's of types of (largely failed) digital payment layers; from bitgold to egold to ..paypal..) BTC is the natural successor. But it has failed. It is unfathomably difficult to control your own BTC in cold wallets and exchange with your bank only then to actually use fiat to pay bills. No keys no crypto. After 10 years in the crypto space I've still yet to meet anyone who has actually bought anything with BTC. The Lazlo pizza is literally part of the folklore to not spend it.
My take is simple -- to never underestimate the power of boredom. (BTW Well done to anyone who gets this far. )The real speculation in Eth/BTC /Tether happened during covid. Stocks plummeted, so many with furlough/spare time/ took to spread betting/ gambling and...crypto. on a no border global level - trade it on a saturday AND god forbid A sunday if you are that bored and can't wait for the markets to open.
There are some super inspiring crypto bro billionaires out there on tik tok and x and discord. And there is an unlimited number of easily influenced ponzi customers keen to have a punt. It's like a lottery for middle class newbie traders. It's not boring. It's edgy, cool. WAGMI,well some of us anyway. We're going to the Moon, by HODLing on . Its tribal. It has its own language/memes. it's Counter culture. Contrarian. It's 100% not square.
Of course it's a ponzi. Its the literal definition of one (look it up)
Everyone can see that.
Of course it will end badly. It's 99.9% guaranteed.
There's no product, no coupon, no ..thing behind it.
But if bitcoin did not exist- someone would have to invent it.
Remember boredom kills.
You can also buy a picasso or a warhol or a diamond or a birkin bag. None of them make sense in any rational traditional sense. We collectively spend £2Bn on private number plates. The veblen good is alive and well.
Finally - a poem. (Sorry I forget from where)
I burn my candle at both ends
it will not last the night
but oh my foes and oh my friends -
it gives a lovely light..
_____
BTC may be burning brightly but like a star it may already be burnt out. I give it till June 2026. Hold tight and enjoy the show.
I am pretty simple, if I do not understand it, do not buy it. If it looks to good to be true , avoid.
Automatic ignore for members calling me a terroist or a criminal. I use Bitcoin and find it invaluable.
Lyn Alden has a great write up on Bitcoin treasury companies on her site. She seems to settle on two key motivations/advantages they may have:
https://www.lynalden.com/bitco...
This is currently the World gone Mad ….!
Mr Nakamoto ‘ invents ‘ bitcoin !the only people attracted to it in the beginning was the criminal fraternities (that should be a red flag to most people ) who like him the fact that the transactions are untraceable ‘supposedly ‘now the biggest criminal of them all Trump is going to make it mainstream ..I have it in my head that someone is going to flick a switch at some point and the Bitcoin becomes Bitless .
Now I accept millions have bought into this Ponzi scheme and they have made money and good for them as timing is everything in life ,but Is it just me ? This reminds of history and in February 1637 the black Tulip event crashed and has been classed as the first ever speculative bubble …popping ! but at least you could have ended up with worthless but while the going is good ….
I have invented Bitair you get a pint of it in a recycled plastic bottle fresh from the Welsh
Alternatively, you could have said that since Nixon moved off the gold standard fiat currencies have lost 99% of their real value, and that bitcoin offers an alternative to the biggest Ponzi scheme of all.
If I want BitCoin I'll just buy it direct at the going price rather than hyper inflated BitCoin Treasury Companies.
This is a damning indictment of the whole UK regulatory system, which has focused for at least a decade on making it difficult for retail investors to access crypto within a sensible environment. All that time it has been the best investment opportunity of our lifetime.
I know there are a lot of people who talk about intrinsic value, speculation, tulips etc. And you may be right. But so far, all we know is that you have been wrong. Bubbles exist all the time. The goal must be to be in the speculative bubbles and exit before they burst. Has the US stock market 2007-2025 been a bubble? Maybe that's what the history books will write, but does that mean anyone who avoided the US since 2015/16 has been right? Absolutely not.
We need easy, regulated ETFs so people can access these type of asset classes directly. These treasury companies have been forced into existence by an FCA, government and, tbf, a media and society, that increasingly believes that nobody should take any risk at all.
But for anyone who has an opinion on crypto, whether "it's all a scam" or "it's going to the moon", please keep it to yourself. We really have no idea. But whether BTC ends up at $1m+ or zero, it is an asset with volatility that can be modelled quite accurately (e.g. Hedgeye's bitcoin tracker), and all that you need to ask is whether to buy or sell it now.
The aim in investing is to make money. Not to be right "in the long run".
Bitcoin is an enormous speculative bubble in my view. It has no intrinsic value. It seems to be owned by speculators, criminals and terrorists.
Re bitcoin
I think it depends on how you define a speculative bubble. Bitcoin is not a speculative bubble like the Tulip bulb which is identified by a very steep bell shaped graph - both up and down where the graph rises and declines very sharply.
If it was a Tulip bulb then at the first sign of trouble the above graph shape should have developed. However, Bitcoin has had many declines in the face of some severe industry problems and subsequently recovered. Something else other than a speculative bubble underpins Bitcoin.
As regards criminals and terrorists - you may be right but it is also used as an essential transactional tool and preservation of assets in parts of the world where there is an almost continual devaluation of the currency.
The UK Government is siting on an estimated £5 -7 billion of Bitcoin which has been seized from various criminal activities. Whilst some of this may be returned to victims of crime, the Chancellor is considering the sale of the Bitcoin to balance the UK budget. Don't be too surprised if the UK becomes permanently reliant on crime, its proceeds and Bitcoin sales. This may give one reason as to why Bitcoin could well be more durable than many suspect.
Meanwhile the establishment wails about the low valuation of the London market with resultant exodus of quality companies - as WarrantStar says, what is needed in London is more regulation not less....
Thanks for drawing attention to this issue Graham. My own view is that if Bitcoin ETCs are allowed in the UK and investment companies are also allowed to own Bitcoin as part of their portfolio, this will destroy the investment case for these Bitcoin Treasury companies. Why pay over NAV for an asset when you can own it for par? That said, people still own and buy MicroStrategy (NSQ:MSTR) and Bitcoin investments are already allowed in the US. So what do I know?
This is the "pro" case and provides examples as to why companies might want to include BTC treasury and in what circumstances.
It is an interesting observation that "if every millionaire in America tried to purchase one single Bitcoin, there wouldn’t be enough to go around." The number of BTC that can ever exist is capped at 21 million.
[Confession: I did need to check. In the United States, there are roughly 22 million millionaires, according to a new report by UBS.]
Demand, in my view, is more likely than not to exceed supply and this can only drive prices upwards - especially when companies are now increasingly buying BTC for their treasuries.
https://strive.com/documents/F...
It seems obvious to me that tighter regulation should be put in place to stop this nonsense / scam / speculation / bubble. Do any of the activities of any of these companies described above by Graham actually provide any useful service or product to anybody? In my opinion the answer is no. So what is actually going on? It is just greedy people seeking to get rich quick by misleading ignorant people into believing that an asset can continue to rapidly increase in value for ever.
More Red Flags that a procession through Tianamen Square on May First.
Thank you Graham, I'm out of step with Bitcoin Bros and margin leverage of $1Trillion according to an FT writer. There are so many Red Lights for me, not just Crypto and having lived through several crashes including 1987 (just), we're raising cash.
Smarter Web (OFEX:SWC) plans to uplist to the main market. Should get into FTSE 250 and get massive institutional flows. Watch this space!
The big scam in the US is microstrategy.
MicroStrategy, Inc. (MSTR) is not a viable Bitcoin development company or a healthy proxy for the digital asset. It is a highly levered, speculative vehicle engineered for the perpetual dilution of its common equity.
https://open.substack.com/pub/tscsw/p/dont-buy-microstrategy-inc-mathematically?utm_source=share&utm_medium=android&r=17fq58
If you ever get the 'urge' then can listen to Peter Schiff - pod or youtube. Entertaining, honest imo, clever on economics (called out the tariffs) and no bull*. A gold bug of course.
First the Bitcoin was visualised as a 'gold' coin, and now we have 'Stable Coin' in the lexicon.
Was there a 'gold' coloured tulip - bet they tried :)
Anyway 'it's oversexed, overpaid and over here' - but us 'gals' are tempted - just don't' have the opportunity.
Danger danger Will Robinson (for our foreign subscribers).
Taiwan Semiconductor Manufacturing Co (NYQ:TSM) going mad. Tariff talk, this, that, blah, blah, wars, nukes, etc - that is why actual performance, actual numbers are so telling - the facts - we get them 'late' but part of the game - the general trend is right in front of your eyes, whatever time average (12/50/100/200) you want to follow.
The biggest bubble since September 1720.