3 months losing $10 billion, DAT companies are returning to rationality

Original author: Eric, Foresight News

In the just-concluded earnings season, digital asset treasury (DAT) companies turned in what looked like a brutal report card. Strategy posted a second-quarter net loss of $8.22 billion, with $8.32 billion of that attributable to fair value write-downs on its Bitcoin holdings; Strive lost $258 million net, with over 90% stemming from depreciation on its Bitcoin and STRC preferred shares; Sharplink posted a net loss of $394 million; Metaplanet reported a first-half net loss of ¥182.8 billion (approximately $1.15 billion), with the second quarter alone accounting for around $430 million; and Bitmine, whose fiscal year ends in August, lost only $83.6 million in its March-to-May quarter, but cumulative net losses over the past nine months have already exceeded $9 billion. Combined, the five companies posted net losses of roughly $10 billion in the second quarter, with cumulative first-half losses surpassing $30 billion.

A year ago, such financial statements would have triggered panic selling. But what actually unfolded was a different picture. On the day Strategy released its earnings, the stock closed up 4.73%, even though the options market had priced in 8% bidirectional volatility. From their late-June lows, Bitmine has rebounded about 36%, Sharplink roughly 37%, Strategy and Strive are up over 10%, and Metaplanet has also recovered about 15% from its late-June trough.

The losses are real, but the market had already priced them in

Everyone knew the DAT companies' second-quarter reports would show massive losses—the only question was whether it would be $10 billion or $9.9 billion.

Large DAT companies all have their own dashboards, or at least someone continuously tracking the relevant data. Every fundraising round, every Bitcoin or Ethereum buy/sell is scrutinized by the world under a magnifying glass. So the size of second-quarter losses was visible to everyone; the earnings reports merely confirmed what had already happened.

What drove these DAT companies' stocks to "bottom out and rebound" was more about both the market and the companies returning to rationality.

In Q2, Strategy raised $8.4 billion in a single quarter, surpassing any quarter last year; in May, it repurchased $1.5 billion in convertible bonds at 92% of face value, reducing total convertibles from $8.2 billion to $6.7 billion; its dollar reserves grew to $3.75 billion, enough to cover 2.1 years of preferred share dividends and interest. Sharplink, meanwhile, completed a $75 million targeted placement in June at a price above net asset value, while simultaneously buying back its own stock at an average price of $4.70.

In their earnings guidance and conference calls, most of these companies converged on the same direction: focusing on increasing the "content" of crypto assets per share.

Last year, DAT companies pitched a growth story—whoever bought coins fastest rose highest. This year, as the tide receded, the surviving companies have all switched their KPI to the same metric: the amount of crypto assets per share. Strategy's Bitcoin content per share grew 5% quarter-over-quarter in Q2; Metaplanet's fully diluted Bitcoin holdings per thousand shares rose 9.6% in the first half; Sharplink repeatedly emphasized the increase in ETH content per share.

Discipline accompanies this goal. Metaplanet has explicitly implemented a capital allocation policy: when mNAV exceeds 1x, it issues shares to buy coins; when below 1x, it halts issuance and instead uses preferred shares and credit facilities, even buying back stock. In Q2, precisely because its mNAV fell below 1x, the company voluntarily abandoned a third-party targeted placement, preferring to let its holdings grow more slowly rather than dilute shareholders at a discount. Sharplink and Strategy have also launched buybacks. Treasury companies are no longer expanding mindlessly; they've returned to a simple question: how to increase the amount of coins behind each share.

Strategy has even been willing to break its "never sell Bitcoin" pledge for this goal, and its stock has seen the weakest rebound among major DAT companies. This is the necessary pain of transitioning from "euphoria" to rationality.

The apprentices of the STRC model

The new tool for achieving this goal is STRC, invented by Strategy in July last year—a perpetual preferred share anchored at $100 face value with monthly dividend adjustments. The logic is simple: attract fixed-income-seeking capital with an annualized dividend yield of around 12%, then convert that money into Bitcoin. By the end of Q2, STRC's nominal size had ballooned from $2.8 billion at the start of the year to $10.5 billion, with institutional capital holding it rising from $1.1 billion to $3.1 billion, bringing its share to 29%.

Imitators are already lining up. Strive's SATA raised its dividend yield to 13% and became the first security in U.S. history to pay dividends every business day on June 16; by early August, it had paid dividends 44 consecutive times, with the price holding steady near face value, and the company took the opportunity to pay off all its debt. Bitmine issued 9.5% dividend perpetual preferred shares (BMNP) in June, raising $274 million. Metaplanet has issued ¥21.2 billion in MERCURY preferred shares, and although new instruments like MARS were delayed due to Japan's dividend distribution conventions, it pivoted in August to launch a "BitBonds" corporate bond program with annual interest rates above 4%, exploring a local version of digital credit.

Among the five, only Sharplink has not followed this path. It chose a different route: staking nearly all of its roughly 890,000 Ethereum, using native yields and on-chain funds to grow its snowball—including an on-chain yield fund with Galaxy that carries $125 million in committed capital. But this too doesn't violate the goal of increasing crypto holdings per share.

Premiums will fade; fundization will remain

Of course, the flip side of rationality returning is the fading of premiums. Strategy's enterprise value mNAV briefly fell below 1x in June, Sharplink's market cap remains below its Ethereum holdings value, and Metaplanet was forced to scale back financing due to its discount. The downward shift in the premium center for DAT stocks relative to their crypto holdings is likely an irreversible trend.

Even if a bull market returns tomorrow, the burned market may not lose its senses again.

But this doesn't signal the end of the model—rather, it reveals the model for what it is. Stripping away the narrative, DAT companies are essentially a type of actively managed, theme-focused fund with financing tools, profiting from the long-term compounding growth of per-share crypto content. Such products have their own buyers. 13F filings show that in Q1 this year, 13 of MSTR's top 15 institutional shareholders increased their positions during the decline, adding a combined $4.6 billion—with Capital International alone adding $1.92 billion. Jane Street expanded its MSTR position by 473% in Q4 last year. Behind Bitmine stand Founders Fund and ARK, and Sharplink's institutional ownership has risen from 6% to 46% within a year.

A quarter with $10 billion in losses didn't kill DAT; it knocked it back from mania into business. When falling coin prices can no longer scare off shareholders, and when companies start meticulously counting every fraction of a coin behind each share, that's when this industry truly comes of age.