NYDIG noted that DATs or digital asset treasuries are now making billion-dollar financing moves based on rather “inconsistent, loosely defined metrics, risking major strategic missteps.” NYDIG pointed out recently in a blog post that with several companies trading right around “1x mNAV,” small changes in valuation methodology can actually flip capital-markets choices from “issue equity to buy BTC” to “sell BTC to buy back equity.”
NYDIG also mentioned that a full NAV framework “exposes these distortions and delivers clearer, more accurate guidance for financing, dilution, and bitcoin-acquisition strategy.”
Earlier this month, Strategy (MSTR) returned to the industry spotlight with the creation of a $1.44B “USD Reserve” and recently added on another $700 million+ to the reserve (a key figure, given BTC’s 144 blocks per day).
The update from NYDIG noted that it was funded “through sales of stock under its ATM program,” and that the reserve “provides a substantial cash buffer to meet dividend obligations on its preferred stock and convertible notes.”
In effect, the move reduces investor concerns “about MSTR’s ability to service these obligations and has helped lift the prices of several preferred issues.”
The company also added to its bitcoin holdings, “bringing the total to an even 650,000 BTC.” And now even more purchases have been made with the overall total now closer to 700,000 BTC at the time of writing.
MSTR also updated its guidance, released “a new investor presentation, and held a call to discuss the developments.”
NYDIG’s interpretation of the event are as follows.
First of all, the company continues to highlight its “preferred stock as a central tool in its bitcoin-acquisition strategy.”
This may be the area where it has achieved its most “significant financial innovation within traditional market structures.”
Second, it plans to lean heavily on “mNAV,” an “industry-defined metric, when making capital markets decisions.”
If mNAV (industry-defined enterprise value to bitcoin value) exceeds “1.0x, MSTR will issue equity to grow its USD Reserve.”
If mNAV falls below 1.0x, the company would “instead sell bitcoin, monetize bitcoin derivatives, or potentially lend out its bitcoin holdings.”
Statements from DATs across the sector make it “clear that mNAV remains a central metric, one that is shaping billion-dollar capital markets decisions.”
They’ve been critical of “mNAV: its ambiguous definition, inconsistent application, lack of uniform industry standards, and questionable components make it ill-suited for decisions of this scale.”
NYDIG prefer a comprehensive accounting of a company’s “true net asset value (NAV) and a direct comparison to its equity value.”
One of the important questions investors and companies “must first address is how to think about a DAT’s capital structure, specifically, how to handle share count.”
Bitcoin-native metrics such as mNAV and “bitcoin yield” have their foundations rooted in the concept of “bitcoin per share” (BPS), defined as a company’s bitcoin holdings divided by its share count.
In practice, however, NYDIG explained that BPS is typically or usually calculated using “assumed shares outstanding,” a non-GAAP measure that should include all “potentially dilutive securities (convertible notes and preferreds, warrants, stock options, etc.).”
In theory, this produces the most “conservative BPS figure (the lowest possible number), though independently verifying what constitutes “assumed shares outstanding” is notoriously difficult.”
The challenge becomes pronounced when applying derivative metrics.
Although DATs commonly use “assumed shares outstanding” (we refer to this as “fully diluted”) for BPS, many switch to basic shares outstanding when calculating market cap, “enterprise value”, and mNAV.
Basic shares exclude all “potentially dilutive instruments.”
To derive “enterprise value,” companies add “the principal value of debt and preferreds to this basic-share market cap and subtract recently reported cash.”
They go further in their “definition of enterprise value, however, and further subtract the fair market value of current bitcoin holdings and other investments, and cash.”
The purpose of calculating enterprise value is “to estimate the theoretical cost to acquire the entire company, including all claims on its assets and liabilities.”
As explained in the analysis, that’s why bitcoin holdings are “subtracted.”
Beyond the lack of industry-wide consistency in “using basic versus fully diluted mNAV, an apples-to-oranges problem, these differences can produce sharply divergent valuations.”
As emphasized in the update:
“For companies trading near the 1.0x mNAV threshold, the stakes are particularly high: the choice between issuing stock to buy bitcoin versus selling bitcoin to repurchase stock can hinge entirely on which share count methodology is used. In other words, the metric can drive capital-markets decisions in opposite directions.”
This is not just theoretical.
Several DATs are hovering “around 1.0x mNAV.”
There’s a substantial amount of work “required even before you reach the basic-versus-diluted share count discussion.”
Keeping up with each company’s status, “merger approvals, share registrations, and pro forma metrics is practically a full-time effort on its own.”
Excluding certain assets, such as cash, investments, or operating businesses, results in “an understated NAV, which in produces inflated equity premiums relative to NAV or even mNAV.”
A company that believes it is issuing “equity at a premium when it is not can end up making value-destructive financing decisions, especially since the discrepancies can be large (mid-single digit percentages) and the margin for error is small (several companies trading close to their NAV).”
The report pointed out that recent actions by Strategy underscore “a broader truth about the DAT ecosystem: capital markets decisions are only as sound as the metrics guiding them.”
As stated in the analysis by NYDIG:
“As the industry increasingly leans on mNAV to justify billion-dollar financing moves, the limitations of that metric — its inconsistent definitions, selective treatment of dilution, and exclusion of key balance-sheet realities — become more consequential. Our analysis demonstrates that basic versus fully diluted share methodologies can produce meaningfully different valuations and, in some cases, drive opposite strategic outcomes. For companies hovering near the critical 1.0x threshold, this can be the difference between issuing equity to purchase bitcoin or selling bitcoin to repurchase equity.”
As noted in the update:
“A more rigorous framework, one anchored in full NAV, offers clearer guidance. NAV forces a more thorough accounting of capital structure, operating businesses, investments, and all financial instruments. It avoids the distortions that arise when certain obligations are ignored or inconsistently treated and helps prevent value-destructive decisions born from overstated premiums or understated liabilities.”
Clearly, the industry would now benefit from “moving toward more uniform, transparent valuation practices.”
Until that standard actually emerges, investors and issuers would need to remain vigilant. According to the extensive update from NYDIG, the choice of metric is “not a technicality; it is a determinant of corporate strategy.”
NYDIG concluded that in a sector where margins for error are relatively thin and capital flows can be quite large, “precision in measurement is not optional.”