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Bitcoin treasury companies usually use a mix of ATM common-stock sales, convertible notes, other debt, preferred stock, credit facilities and operating cash to acquire bitcoin. Debt can avoid immediate ownership dilution and may have a low cash coupon, but it brings interest, maturity, covenant, collateral and refinancing risk. Equity has no required repayment and can strengthen the balance sheet, yet every new share reduces an existing holder’s percentage ownership. The better choice depends on the issue price, Bitcoin price, security terms, liquidity and whether the transaction increases Bitcoin or asset value per share.
There is no universally superior financing mix. A transaction that is accretive to Bitcoin per share in a rising market can become destructive if shares are sold too cheaply, Bitcoin falls, or debt must be refinanced under stressed conditions.
How a Bitcoin treasury company finances purchases
A Bitcoin treasury company raises capital and directs some or all of the proceeds toward acquiring bitcoin. Strategy Inc. describes the approach in its 2024 Form 10-K as periodically issuing debt or equity securities, or using other capital-raising transactions, with the objective of buying bitcoin. Its stated funding plan includes common stock and fixed-income instruments such as debt, convertible notes and preferred stock.
Financing proceeds do not always go directly to bitcoin purchases. A company may repay an existing facility, pay interest, fund mining or other operations, maintain cash reserves, or cover fees before buying bitcoin. Investors therefore need to trace the stated use of proceeds and compare the amount raised with the change in bitcoin holdings.
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The central shareholder question is not simply “debt or equity?” It is whether the financing raises the company’s bitcoin exposure faster than it increases the claims against the company. Issuance price, coupon, conversion price, maturity, collateral, seniority and the resulting Bitcoin-per-share measure all matter.
Financing choices at a glance
| Instrument | What the company receives | Effect at issuance | Main future risk | What to measure |
|---|---|---|---|---|
| ATM common stock | Cash from selling shares gradually in the market | Immediate dilution of existing holders | Repeated issuance at a low price can reduce value per share | Shares issued, average sale price, bitcoin bought and Bitcoin per share |
| Convertible notes | Debt proceeds, often with a lower cash coupon than straight debt | No immediate dilution unless converted or settled in shares | Maturity, refinancing and potential conversion dilution | Principal, coupon, conversion price, settlement terms and maturity |
| Other debt or credit facilities | Borrowed cash, sometimes secured by assets | No immediate common-share dilution | Interest, covenants, collateral calls and repayment | Outstanding balance, rate, collateral, covenants and available liquidity |
| Preferred stock | Capital with a stated preference or dividend terms | Usually ranks ahead of common equity; dilution depends on conversion features | Dividend or redemption obligations and senior claims | Liquidation preference, dividend, conversion and redemption terms |
| Operating cash | Internally generated funds | No issuance dilution or new debt | Less cash for operations and potentially weaker liquidity | Cash balance, free cash flow and planned operating needs |
ATM common-stock financing
How an ATM works
Under an at-the-market program, a company is authorized to sell common shares periodically through a broker into the public market. It can choose the timing and amount rather than issuing the entire authorization on one day. That flexibility is valuable when market liquidity is available and the share price is high.
Each sale increases the share count. An existing holder who does not buy additional shares owns a smaller percentage of the company after issuance. The economic impact depends on what the company buys with the proceeds and the price at which the shares were sold. Selling stock above the value of the company’s existing assets can be accretive; selling below that value can be dilutive in a deeper economic sense than the ownership percentage alone suggests.
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Why companies use ATMs
- They can raise capital in small increments as market conditions permit.
- They avoid a fixed maturity and scheduled principal repayment.
- They can preserve borrowing capacity for a later need.
- They can issue when the stock trades at a premium to the company’s bitcoin or asset value.
What shareholders must check
- The number of shares issued during the period and the weighted-average sale price.
- The remaining authorized ATM capacity, which represents potential future dilution rather than cash already raised.
- Whether proceeds bought bitcoin, repaid debt, funded operations or remained as cash.
- Bitcoin holdings and Bitcoin per share before and after the issuance.
- Any fees, commissions or other issuance costs that reduce net proceeds.
An ATM is not automatically shareholder-friendly because it is flexible. A company can issue repeatedly while the stock price falls, increasing the share count without adding a proportionate amount of bitcoin.
Convertible notes: delayed dilution with a deadline
How the instrument works
A convertible note begins as debt. Investors lend money, receive interest according to the note terms and expect repayment at maturity unless the notes are converted, redeemed or otherwise settled under the agreement. The conversion feature lets holders exchange principal, or an amount determined by the conversion formula, for common shares when specified conditions are met.
Because the conversion option has value, a convertible note may carry a lower cash coupon than comparable non-convertible debt. That can make it an inexpensive way to obtain a large amount of capital for bitcoin purchases. The company still has a contractual obligation, however. If the notes are not converted, principal must be repaid or refinanced.
Terms that determine the outcome
- Principal: The amount that must ultimately be repaid or settled.
- Cash coupon: The periodic interest cost. A low coupon does not eliminate the principal obligation.
- Conversion price or rate: The share price used to determine potential dilution.
- Conversion window and triggers: Conditions governing when holders or the company can convert.
- Settlement method: Physical shares, cash, or a combination can produce different dilution and liquidity outcomes.
- Maturity date: The point at which refinancing or repayment becomes unavoidable if conversion has not occurred.
- Call, put and adjustment provisions: These can change timing and the number of shares delivered after corporate or market events.
When a convertible helps common holders
If the company buys bitcoin with the proceeds and the bitcoin value rises enough, the conversion price may be well above the pre-issue share price. Existing holders then avoid immediate dilution, while noteholders may choose to convert later at a higher price. The company also benefits from a lower cash interest burden than it might have paid on straight debt.
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When a convertible becomes dangerous
A falling bitcoin price can leave the company with debt that cannot be refinanced on attractive terms. If the notes mature while the stock price is below the conversion price, holders may demand repayment rather than convert. The company may then need to sell bitcoin, issue stock at a depressed price, or raise new debt. Conversion can also create substantial dilution if the share price rises sharply and the conversion terms deliver many shares.
Other debt and credit facilities
Straight debt and revolving credit facilities provide cash without issuing common shares at the outset. They can be useful for bridging a purchase, meeting working-capital needs or preserving the ability to sell equity later. The trade is a fixed claim against the company, regardless of whether bitcoin rises or falls.
Costs beyond the stated interest rate
- Mandatory interest payments consume cash that could otherwise buy bitcoin or fund operations.
- Principal maturities create a refinancing event even when the company is otherwise solvent.
- Covenants can restrict additional borrowing, asset sales, distributions or bitcoin transactions.
- Secured facilities may give lenders claims on collateral before common shareholders.
- Variable rates can increase the cash burden when benchmark rates rise.
- A borrowing-base facility can shrink if the value of pledged assets falls, forcing repayment or additional collateral.
MARA Holdings’ 2025 Form 10-K reported a $150.0 million line of credit that was fully utilized and $350.0 million outstanding at December 31, 2025. The two figures should not be treated as interchangeable: the first describes the stated line of credit, while the second is the reported outstanding amount across the relevant facility or facilities. Investors should read the filing’s debt footnote to identify the exact commitment, collateral and maturity.
Preferred stock is neither ordinary equity nor ordinary debt
Preferred stock generally ranks ahead of common stock for dividends and liquidation proceeds, but behind debt. It may pay a stated dividend, accumulate unpaid dividends, include redemption rights or convert into common shares. Those terms determine whether it behaves more like permanent capital or a senior claim that can pressure cash flow.
Preferred stock can let a company raise capital without an immediate increase in common shares. That does not make it free of dilution or risk. A convertible preferred security can produce future common-share dilution, and a cumulative dividend can build a liability-like claim even when the company pays nothing in cash during a weak period. Common shareholders should examine the liquidation preference, dividend rate, conversion ratio, voting rights, redemption date and any ranking relative to other preferred classes.
Strategy Inc.’s 2025 filing says that, before 2025, it relied primarily on Class A common-stock sales and senior convertible notes, then issued five preferred-stock classes in 2025. Each class must be analyzed on its own terms; the existence of several classes does not reveal their relative cost or seniority.
Using operating cash instead of new securities
Cash generated by operations avoids both issuance dilution and contractual interest. It also reduces the company’s liquidity buffer. A treasury company that spends cash on bitcoin may have less money for payroll, equipment, taxes, maintenance, debt service or unexpected expenses. The relevant question is whether the remaining cash is sufficient under a prolonged bitcoin downturn, not whether the purchase was debt-free.
Operating cash is most defensible when recurring cash generation is predictable and the company maintains a reserve sized for its obligations. A company with volatile or negative operating cash flow may be forced back into the capital markets shortly after using cash for bitcoin.
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1. Identify the security and the cash actually available
Start with gross proceeds, underwriting discounts, commissions, original-issue discounts and other fees. The amount available to buy bitcoin is net proceeds, not the headline principal or authorized share capacity.
2. Calculate immediate ownership dilution
For a common-stock sale, divide new shares by post-transaction shares. For a convertible, model the maximum shares delivered under the conversion formula and settlement method. Preferred stock requires a separate conversion analysis because it may have both a senior claim and a future share claim.
3. Map the cash obligations
List every coupon, dividend, fee, amortization payment and maturity date. Put maturities on a calendar alongside expected cash balances and realistic refinancing windows. A security with no cash coupon can still require a large principal payment.
4. Examine seniority and collateral
Debt and preferred claims are paid before common equity in a liquidation according to their contractual ranking. Secured creditors may have rights to pledged assets. A company can report a large bitcoin balance while common shareholders have limited residual value if senior claims are also large.
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Separate bitcoin purchases from debt repayment, operating expenses, capital expenditure and cash retained on the balance sheet. A financing that raises bitcoin holdings but also adds a larger senior claim may not improve the common equity proposition.
6. Test Bitcoin per share
Use Bitcoin per share = total bitcoin held ÷ fully diluted common shares. For a company that reports a percentage growth metric, compare the before-and-after figures and the period covered. Metaplanet identifies BTC Yield, the percentage growth in Bitcoin per share, as a key performance indicator.
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7. Run price and refinancing scenarios
Model at least a rising-bitcoin case, a flat case and a severe decline. In each case, include interest, dividends, operating cash needs, collateral requirements, conversion and maturity events. A transaction that works only if bitcoin rises quickly has a different risk profile from one that remains serviceable while prices are flat.
Why Bitcoin per share matters more than bitcoin holdings alone
Total bitcoin can increase while each common share represents less bitcoin. That happens when the number of shares and potential conversion shares grows faster than the holdings. Conversely, a company can issue shares and still increase Bitcoin per share if the proceeds buy enough bitcoin relative to the new share count.
The calculation must use a consistent share base. Basic shares, diluted shares, in-the-money options, warrants, convertible notes and convertible preferred stock can produce very different results. Disclose whether the calculation is basic or fully diluted and whether it includes securities that are not currently convertible.
BTC Yield is a rate of change, not a guarantee of shareholder return. Bitcoin per share can rise while the stock price falls because the market applies a lower valuation multiple, discounts debt, or expects future dilution. The metric should therefore be read alongside net asset value, debt, preferred claims, liquidity and the share price.
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Strategy Inc.
Strategy’s 2024 Form 10-K describes a treasury program using common stock, debt, convertible notes and preferred stock, with proceeds intended in part for bitcoin purchases. Its 2025 filing states that the company used Class A common-stock sales and senior convertible notes primarily before 2025, then added five preferred-stock classes during 2025. These disclosures illustrate a layered capital structure rather than a single permanent funding source.
Metaplanet Inc.
Metaplanet’s official company overview says management pivoted to a Bitcoin treasury strategy in 2024 and uses equity and debt financing strategies. It identifies BTC Yield, defined as the percentage growth in Bitcoin per share, as a key performance indicator. That focus emphasizes why investors should track per-share exposure instead of only the number of bitcoin held.
MARA Holdings
MARA’s 2024 Form 10-K reported $4.0 billion of financing cash flow, $1.9 billion of common-stock issuance under its 2024 ATM, $2.2 billion of net proceeds from 2024 convertible notes and 22,065 bitcoin purchased with cash and convertible-note proceeds. The figures are company-reported for 2024 and should not be interpreted as a general benchmark for every treasury company.
MARA’s 2025 Form 10-K reported $1.6 billion of financing cash flow, $1.0 billion of net proceeds from August 2032 notes and $568.6 million of common-stock sales under its 2024 and 2025 ATM programs. It also reported the credit-line figures described above at December 31, 2025. Comparing the two years shows why investors should inspect both debt and equity flows: financing cash flow can remain substantial even when the mix of instruments changes.
How market conditions change the preferred choice
When the stock trades at a strong premium
ATM equity can be attractive because the company may exchange fewer shares for each dollar of capital. If net proceeds buy enough bitcoin to increase Bitcoin per share, the issuance can be accretive despite percentage ownership dilution. Management must still consider whether the premium is temporary and whether a large program could pressure the stock price.
When the stock trades near or below asset value
Issuing common stock may transfer value from existing holders to new buyers if the sale price is below the company’s underlying asset value after considering debt and preferred claims. A convertible note may delay that dilution, but it replaces the immediate issue with a future maturity and conversion decision.
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Debt can magnify common-equity gains because the company controls more bitcoin without issuing shares immediately. The same leverage magnifies losses and leaves interest and principal obligations in place if the rally ends.
When bitcoin is falling or volatile
Equity absorbs the decline without a required repayment date, although the stock price and future fundraising capacity may suffer. Debt can force asset sales, refinancing or deeply discounted equity issuance at the worst point in the cycle.
Common mistakes when evaluating a treasury financing
- Counting authorized ATM capacity as cash raised: Authorization is potential supply, not proceeds already received.
- Calling a convertible “non-dilutive”: It is non-dilutive only until conversion or share settlement, and the maximum share count may be material.
- Comparing coupon rates alone: Include original discounts, fees, maturity value, hedges and refinancing cost.
- Ignoring preferred seniority: Preferred dividends and liquidation preferences reduce the residual claim of common stock.
- Using basic shares for a leveraged company: Convertible notes, preferred stock, warrants and options can make fully diluted exposure much larger.
- Assuming more bitcoin means more value per share: Share count and senior claims can grow faster than holdings.
- Mixing reporting periods: A 2024 purchase figure cannot be directly matched to a 2025 share count without an appropriate period-end adjustment.
- Overlooking liquidity: A company can own valuable bitcoin and still lack dollars for interest, payroll or a near-term maturity.
A practical due-diligence checklist
- Read the latest balance sheet and debt footnote, including maturities, rates, collateral and covenants.
- Reconcile ATM shares sold, average price, net proceeds and remaining capacity.
- List every convertible security’s principal, coupon, conversion price, settlement method and maturity.
- List preferred classes separately and record dividends, liquidation preferences, conversion and redemption rights.
- Reconcile beginning bitcoin, purchases, sales, pledged coins and ending holdings.
- Calculate basic and fully diluted Bitcoin per share using the same date and definition.
- Compare financing cash flow with cash used to buy bitcoin and cash retained for operations.
- Stress-test a major bitcoin decline, a closed equity market and refinancing at a higher interest rate.
- Check whether a credit facility is fully drawn and whether falling collateral values can trigger repayment.
- Read management’s stated objective and compare it with actual use of proceeds in the filing.
The decision framework for shareholders
Debt is generally more attractive when the company has dependable liquidity, a manageable maturity schedule, collateral headroom and a conversion price that leaves room for future appreciation. Equity is generally more resilient when bitcoin is volatile, cash flows are uncertain or the company cannot tolerate a refinancing event. Preferred stock can fill a middle position, but its senior claims and dividends must be priced into the common-share analysis.
For every issuance, ask three separate questions: How many new claims were created? What assets did the proceeds purchase? What obligations remain if bitcoin falls? Only after answering all three can an investor judge whether the transaction improved the common shareholder’s position.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallThe most useful outcome measure is not the headline amount raised or the total bitcoin balance. It is the change in fully diluted Bitcoin per share, considered together with debt, preferred claims, cash needs, market access and the price paid for the financing. Company-reported BTC Yield can help organize that analysis, but it does not replace reading the security terms.
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