Original article by Prathik Desai
Original translation: Luffy, Foresight News
In 2020, Strategy (then known as MicroStrategy) began exchanging debt and stock for Bitcoin. The company, which originally sold enterprise software, transformed itself under the leadership of co-founder and chairman Michael Saylor, injecting company funds into Bitcoin and becoming the largest Bitcoin holder among listed companies.
Five years later, Strategy is still selling software, but the contribution of operations to the company’s overall gross profit has been steadily declining. In 2024, operating gross profit fell to about 15% from 2023; in the first quarter of 2025, the figure was down 10% from the same period last year. As of 2025, Strategy’s model has been copied, adapted, and simplified, paving the way for more than a hundred public entities to hold Bitcoin.
The model is simple: issue low-cost debt with the company as collateral, buy Bitcoin, wait for it to appreciate, then issue more debt to buy more Bitcoin - forming a self-reinforcing cycle, turning corporate treasuries into leveraged cryptocurrency funds. Maturity debt is repaid by issuing new shares, diluting the equity of existing shareholders. But the appreciation of Bitcoin holdings pushes up the stock price, offsetting the impact of equity dilution.
Most of the companies following in Strategy’s footsteps have existing businesses that they hope will generate income for their balance sheets from an appreciating asset like Bitcoin.
Strategy used to be a purely enterprise analytics and business intelligence platform; Semler Scientific, the 15th largest publicly traded Bitcoin holder, was once a pure health technology company; GameStop, which recently joined the Bitcoin Reserve Club and attracted attention, was previously a well-known game and electronics retailer that only recently got involved in Bitcoin treasury construction.
Today, a new wave of companies are eager to enjoy the dividends of Bitcoin, but do not want to bear the burden of establishing a physical business . They have no customers, no profit model, and no operational roadmap. They just need a balance sheet full of Bitcoin and a quick access to the public market through financial shortcuts. Thus, the special purpose acquisition company (SPAC, that is, backdoor listing) came into being.
These bitcoin asset SPACs, like ReserveOne, ProCap (backed by Anthony Pompliano), and Twenty One Capital (backed by Tether, Cantor Fitzgerald, and SoftBank), are offering simple wrappers. Their pitch is clear: Raise hundreds of millions of dollars, buy bitcoin in bulk, and give public market investors a ticker symbol to track it all. That’s it. That’s the whole business.
The approach of these new entrants is the exact opposite of Strategy: accumulate Bitcoin first and then consider the business part. This model is more like a hedge fund than a company.
Yet, many companies are still lining up to choose the SPAC path. Why is that?
A SPAC is a pre-funded shell company that raises money from investors (usually a group of private investors), lists on a stock exchange, and then merges with a private company. It is often described as a shortcut to an IPO. In the cryptocurrency world, it is a way for entities with heavy Bitcoin holdings to go public quickly before market sentiment or regulation turns against them, and speed is key.
Although this speed advantage is often illusory. SPAC promises to complete the listing in 4-6 months, while IPO takes 12-18 months, but in reality, regulatory review of cryptocurrency companies takes longer. For example, Circle failed in its attempt to go public through SPAC and later succeeded through a traditional IPO.
But SPACs still have their advantages.
They allow these companies to describe bold visions, such as “holding $1 billion in Bitcoin by the end of the year,” without immediately undergoing the rigorous scrutiny of the traditional IPO process. They can bring in a post-IPO private placement (PIPE) from heavyweights like Jane Street or Galaxy, pre-negotiate a valuation, and package it into an SEC-compliant shell company while avoiding being labeled an “investment fund.”
The SPAC route simply makes it easier for companies to sell their strategies to their stakeholders and investors because there is nothing else to sell except Bitcoin.
Remember when Meta and Microsoft considered adding Bitcoin to their treasury? They were met with overwhelming opposition.
For public investors, SPACs appear to offer pure exposure to Bitcoin without having to directly touch the cryptocurrency, just like buying a gold ETF.
But SPACs also face acceptance issues among retail investors, who prefer to gain exposure to Bitcoin through more popular channels, such as exchange-traded funds (ETFs). The 2025 Institutional Investor Digital Asset Survey showed that 60% of investors prefer to be exposed to cryptocurrencies through registered investment vehicles (such as ETFs).
Despite this, the demand remains because of the leverage potential inherent in this model.
Strategy didn’t stop buying bitcoin, but continued issuing convertible notes (most likely redeemable by issuing new shares). This approach helped the former business intelligence platform become a bitcoin “turbocharger”: its stock price rose more than bitcoin itself during the rise of bitcoin. The blueprint is still in the minds of investors: a bitcoin company based on a SPAC can replicate this acceleration model - buy bitcoin, issue more shares or debt to buy more bitcoin, and repeat the cycle.
When a new Bitcoin company announces a $1 billion institutional PIPE investment, that in itself conveys credibility, signaling to the market that big money is paying attention. Think about how much credibility Twenty One Capital has with heavyweights like Cantor Fitzgerald, Tether, and Softbank backing it.
SPACs allow founders to achieve this goal earlier in the company lifecycle without having to first build a revenue-generating product. This early institutional recognition helps gain attention, capital, and momentum while reducing investor resistance that already public companies may face.
For many founders, the appeal of the SPAC path lies in flexibility. Unlike IPOs, where disclosure timing and pricing are very strict, SPACs have greater control over narrative, forecasts, and valuation negotiations. Founders can tell forward-looking stories, develop capital plans, and retain equity while avoiding the endless financing cycle in the traditional VC→IPO path.
The packaging itself is attractive. Publicly traded stocks are a well-known language: tickers can be traded by hedge funds, added to retail platforms, and tracked by ETFs. It is a bridge between crypto-native ideas and traditional market infrastructure. For many investors, the packaging is more important than the underlying mechanics: if it looks like a stock and trades like a stock, it can fit into an existing portfolio.
If SPACs can be formed and go public without any existing business, how do they work and where does the revenue come from?
SPACs also allow for creativity in structure. A company could raise $500 million, put $300 million into Bitcoin, and use the rest to explore yield strategies, launch financial products, or acquire other crypto businesses that generate revenue. This hybrid model is difficult to achieve with ETFs or other models that have stricter rules and more rigid mandates.
Twenty One Capital is exploring structured fund management. It has more than 30,000 bitcoins in reserve, and uses a portion of it for low-risk on-chain yield strategies. The company merged with a SPAC backed by Cantor Fitzgerald and raised more than $585 million through PIPE and convertible bond financing to purchase more bitcoins. Its roadmap includes building a bitcoin-native lending model, capital market tools, and even producing bitcoin-related media content and promotional activities.
Nakamoto Holdings, founded by Bitcoin Magazine’s David Bailey, has taken a different path to similar goals. It merged with KindlyMD, a publicly traded medical company, to build a Bitcoin treasury strategy. The deal received $510 million in PIPE and $200 million in convertible notes, making it one of the largest crypto-related financings. It hopes to securitize Bitcoin exposure into stocks, bonds, and hybrid instruments that can be traded on major stock exchanges.
Pomplianos ProCap Financial plans to provide financial services based on the Bitcoin treasury, including crypto lending, staking infrastructure, and building products that allow institutions to earn Bitcoin returns.
ReserveOne takes a more diversified route. Although Bitcoin remains the core of its portfolio, it plans to hold a basket of assets such as Ethereum and Solana, using these assets to participate in institutional-level staking, derivatives, and over-the-counter lending.
Backed by companies like Galaxy and Kraken, ReserveOne positions itself as a crypto-native BlackRock, combining passive exposure with active yield generation. In theory, its revenue comes from lending fees, staking rewards, and the spread between short-term and long-term bets on managed crypto assets.
Even if an entity has found a sustainable way to generate revenue, the label of a “public company” still brings with it paperwork and challenges.
Post-merger operations highlight the need for a sustainable revenue model. Fund management, custody, compliance, and auditing all become critical, especially when the only product is a volatile asset. Unlike ETF issuers, many SPAC-backed companies are built from scratch, custody may be outsourced, controls may be weak, and risks accumulate quickly without being noticed.
Then there are governance issues. Many SPAC sponsors retain special rights, such as enhanced voting rights, board seats and liquidity windows, but they often lack cryptocurrency expertise. When the price of Bitcoin plummets or regulation tightens, experts are needed to take the helm. When the market is rising, no one pays attention; but when it falls, problems are exposed.
So, how should retail investors respond?
Some will be attracted by the upside, thinking that a small bet on a Bitcoin SPAC could recreate the Strategy boom. But they will also face multiple risks, such as equity dilution, volatility, redemptions, and management teams with untested performance. Others may prefer the simplicity of a spot Bitcoin ETF or even hold Bitcoin directly.
Because when you buy bitcoin stocks listed through SPACs, you don’t own bitcoin directly, you buy into someone else’s plan to buy bitcoin for you, and hope they succeed. That hope comes at a price, and in a bull market, that price seems worth paying.
However, you still need to understand what you are actually buying and how much.
