A New Way To Value Bitcoin Treasury Companies

Forbes

11-07-2025

Market-to-Fair Book Value
Strategy—formerly known as MicroStrategy—is the original Bitcoin treasury company. Michael Saylor famously announced that the company's primary mission was to buy and hold bitcoin. Since then, several other companies have followed suit, including Semler Scientific, Marathon Digital Holdings, MetaPlanet, SmarterWeb, and others. In fact, new entrants continue to appear almost weekly. Some of these companies, like Marathon, have a substantial underlying operating business. Others, like XXI, are pure-play treasury companies. Still others, like Strategy, Semler, and MetaPlanet, operate small businesses that are dwarfed by their Bitcoin holdings.
So, what is the best way to value these companies?
Traditionally, investors have used mNAV—Market-to-Net Asset Value. Because most of these firms' value is derived from their bitcoin holdings, the standard metric has been mNAV: the ratio of the company's enterprise value to the value of its underlying Bitcoin. When mNAV is less than one, the company trades at a discount to the value of its Bitcoin. When mNAV is greater than one, it trades at a premium. There are several reasons a firm might trade at either a discount or a premium. For example, MicroStrategy traded at a discount during the last Bitcoin bear market, when its mNAV dropped below 0.8. Today, it trades at a premium, fueled by sustained interest from large institutional investors. Often, this premium reflects regulatory or geographic arbitrage.
Some investors cannot directly buy or hold Bitcoin. Bitcoin treasury companies offer these investors a proxy. For example, many mutual funds are restricted by their mandates to hold only publicly listed equities—and must hold them in large enough quantities to matter. That creates demand for companies like Strategy. In another case, countries like the United Kingdom prohibit Bitcoin in retirement accounts but allow public equities. These are just two reasons why MSTR might trade at a premium to their net asset value.
The conventional definition of mNAV is:
where:
The justification for using enterprise value—rather than just market cap—is that EV reflects what an acquirer would need to pay to buy the entire company: all its equity and all its debt.
But I propose a different measure.Market-to-Fair Book Value
An alternative way to evaluate a Bitcoin treasury company is to consider what would happen in bankruptcy. Since creditors are paid first, only the remaining assets—if any—go to equity holders. In this context, the relevant comparison is not enterprise value to Bitcoin value, but rather the market value of equity to the (fair) book value of the firm.
Book value is important because it reflects the net assets of a firm—the difference between its assets and liabilities. For Bitcoin treasury companies, the primary asset is bitcoin, and other assets are typically negligible. Similarly, we focus on debt related to bitcoin acquisitions, ignoring other liabilities for simplicity.
Now, U.S. accounting rules (GAAP) define book value based on historical cost, which isn't helpful in this case. What matters more is marking bitcoin to its fair market value. So, I define:
Fair book value gives a clearer picture of what shareholders might actually recover—and provides a more intuitive, bankruptcy-aware valuation framework for Bitcoin treasury companies.
Here, fair book value refers to book value marked to market. Since the primary asset is Bitcoin—with a liquid market price—we can mark it at fair value. This lets us compute the market to fair book value (MFBV), defined as:
This measure is superior because it more closely reflects what would happen in bankruptcy. The value of Bitcoin would be used to pay off existing debt, so what matters is the remaining Bitcoin value after debt repayment. The equity value must then be compared against this post-debt Bitcoin value. Note that debt has similar—but not identical—effects on both mNAV and market to fair BV. As debt increases, both ratios increase.Formulating a Decision Rule
If we put on our value investor hat, we would buy securities when they are undervalued—specifically, when their market capitalizations are sufficiently low. To operationalize this, imagine setting a threshold such that you buy when mNAV lies below that threshold. Then, through some simple algebra, it can be shown that you would buy when
In contrast, suppose you set a threshold for MFBV (market to fair book value) such that you buy when the market cap is sufficiently low. In this case, your threshold would satisfy
As you can see, the thresholds vary depending on which metric you use. There's an edge case when , where the decision rule yields the same outcome for both metrics. But for any other thresholds, the outcomes diverge.The Leaderboard
Let's examine how the top Bitcoin treasury companies perform under both metrics, as of late June, 2025:
mNAV Chart
The newcomer Metaplanet has the highest mNAV in the group. The market is pricing its shares at a steep premium to its Bitcoin holdings. This benefits Metaplanet for now, as it can sell shares at a high premium and use the proceeds to buy large quantities of Bitcoin.
Now let's consider how these same companies compare based on market to fair book value:
MFBV Chart
The chief difference between these tables shows that MARA had a lower mNAV than MSTR, but actually has a higher MFBV.
As you can see, the measures are broadly similar—except Metaplanet now shows a negative market to fair book value. This happens because its debt exceeds the value of its bitcoin. If Metaplanet were to go bankrupt, equity holders would receive nothing since the company's assets (i.e., its bitcoin) wouldn't cover the face value of the debt.The Bottom Line
Personally, I prefer the market to fair book value metric because it offers a clearer view of downside protection. A company with a very low market to fair book value signals that equity holders would likely still recover value even in bankruptcy. If the ratio is less than 1, it means that after Bitcoin is sold to repay debt, there would still be more than a dollar of value left for every dollar of equity held.