Unveiling the Truth Behind the Soaring Stock Prices of Encryption Companies: Is it a Rise in Coin Value or Effective Reserve Strategies?

Recently, the stock prices of some companies related to cryptocurrency have seen significant growth, sparking widespread discussion within the industry about the reasons behind this rise. Is it the increase in token prices, or has the company's strategy of holding digital asset reserves played a key role? Let's delve into this issue through a typical case.

Since a well-known technology company implemented its Bitcoin reserve strategy in 2020, its stock price has soared from $13 to $455, a staggering rise. What factors are at play behind this 35-fold increase?

Analysis shows that in this huge rise:

• 11 times originated from the price of Bitcoin rising from 11,000 USD to 118,000 USD
• 25 times originates from the digital asset treasury strategy adopted by the company

This means that the treasury strategy has an impact on stock prices that even exceeds the rise in the price of the token itself. So, how does this strategy work?

The company's digital asset treasury strategy mainly increases the number of tokens held per share through the following methods:

1. When the stock issuance price is higher than the net asset value per share, issuing new shares can increase the number of tokens per share.
2. Utilize token price fluctuations to reduce borrowing costs, thereby increasing return on investment.
3. Use financing tools such as convertible bonds or preferred shares to limit equity dilution.

It is worth noting that Ethereum's volatility is higher than that of Bitcoin, which means that this strategy may have a more significant impact on Ethereum reserves.

Another company, Bitmine, has recently announced a similar Ethereum reserve strategy. By the seventh day after the transaction was completed, Bitmine had acquired $1 billion worth of Ethereum, whereas the aforementioned tech company had only acquired $250 million worth of tokens in the same timeframe.

These cases indicate that digital asset reserve strategies can not only help companies increase the per-share token holdings but also optimize the capital structure through various financial tools, thereby achieving greater returns amid token price fluctuations.

As more and more companies begin to explore digital asset reserve strategies, we may see more interesting financing and investment models emerge. This not only provides a new development direction for traditional companies but also brings new growth momentum to the entire encryption currency market.