Author: Peggy, BlockBeats
More and more listed companies are beginning to "reserve cryptocurrencies".
They are no longer just buying BTC or ETH, but are imitating MicroStrategy by building a fully replicable treasury model: using traditional financial instruments such as PIPE, SPAC, ATM, and Convertible Bonds to raise large-scale funds, establish positions, create momentum, and overlay the new narrative of "on-chain treasury", incorporating Bitcoin, Ethereum, SOL, and other cryptocurrencies into the company's core balance sheet.
This is not just a change in asset allocation strategy, but a new type of "financial engineering": a market experiment driven by capital, narrative, and regulatory gaps. Institutions such as UTXO Management, Sora Ventures, ConsenSys, Galaxy, and Pantera have successively entered the market, promoting several marginal listed companies to "transform" into "crypto reserve stocks" in the US or Hong Kong stock markets.
However, this seemingly innovative capital feast is also raising the vigilance of old-school financial professionals. On July 18, Wall Street's famous short seller Jim Chanos warned that today's "Bitcoin treasury craze" is repeating the 2021 SPAC bubble - enterprises are buying coins by issuing convertible bonds and preferred shares without actual business support. "There are billions of announcements every day, exactly the same as back then," he said.
This article combs through four key tools and representative cases behind this trend, trying to answer a question: When traditional financial tools meet crypto assets, how does a company evolve from "buying coins" to "creating a game"? And how should retail investors identify risk signals in this capital game?
How do financing tools build a "coin-buying company"?
PIPE: Institutional discounted entry, retail investors holding at high positions
PIPE (Private Investment in Public Equity) refers to a listed company issuing stocks or convertible bonds to specific institutional investors at a discounted price to achieve rapid financing. Compared to traditional public offerings, PIPE does not require a complicated review process and can complete capital injection in a short time, thus often viewed as a "strategic blood transfusion" tool during tight financing windows or uncertain market periods.
In the crypto treasury trend, PIPE has been given another function: creating a signal of "institutional entry", driving rapid stock price increases, and providing "market certification" for project narratives. Many originally crypto-unrelated listed companies have introduced funds through PIPE to purchase large amounts of BTC, ETH, or SOL, quickly reshaping into a new identity of "strategic reserve enterprises". For example, SharpLink Gaming (SBET) saw its stock price surge by over tenfold in a short period after announcing the establishment of an ETH treasury with a $425 million PIPE financing.
Business Idle Rotation and Narrative Overdraft: Many companies merged through SPAC lack stable revenue, with their valuation highly dependent on whether the "Bit strategy" can continuously attract attention. Once market sentiment reverses or regulation tightens, stock prices will quickly fall.
Unequal Institutional Priority Structure: Initiators and PIPE investors usually enjoy enhanced voting rights, early unlocking, and pricing advantages, leaving ordinary investors at a dual disadvantage in information and rights, with severe stock dilution.
Compliance Operation and Information Disclosure Challenges: After completing the merger, the company needs to undertake listed company obligations, such as auditing, compliance, and risk disclosure, especially in the context of underdeveloped digital asset accounting rules, which easily leads to financial report chaos and audit risks.
Valuation Bubble and Redemption Mechanism Pressure: SPAC often has inflated valuations due to narrative expectations during initial listing. If retail investors massively redeem during sentiment reversal, it will cause tight cash flow, failed expected financing, and even trigger secondary bankruptcy risk.
The more fundamental problem is that SPAC is a financial structure, not a value creation mechanism. It is essentially a "narrative container": packaging Bitcoin's future vision, institutional endorsement signals, and capital leverage plans into a tradable stock code. When Bitcoin rises, it looks more attractive than ETF; but when the market reverses, its complex structure and fragile governance will be more thoroughly exposed.
ATM: Printing Money Anytime, Issuing More When Falling
ATM (At-the-Market Offering) was originally a flexible financing tool allowing listed companies to sell stocks to the open market in stages and raise funds in real-time based on market prices. In traditional capital markets, it is often used to hedge operational risks or supplement cash flow. In the crypto market, ATM has been given another function: becoming a "self-service financing channel" for strategic reserve companies to continuously add BTC and maintain liquidity.
The typical approach is: the company first builds a Bitcoin treasury narrative, then launches an ATM plan, continuously selling shares to the market without specific pricing and time windows to obtain cash for purchasing more BTC. Unlike PIPE, it does not require specific investors' participation, nor complex IPO disclosure processes, making it more suitable for asset allocation companies with flexible pace and narrative-driven strategies.
For example, Canadian listed company LQWD Technologies announced launching an ATM plan in July 2025, allowing it to sell up to 10 million Canadian dollars of common stocks to the market irregularly. In the official statement, the ATM plan "enhances the company's BTC reserve capability and supports its global Lightning Network infrastructure expansion", clearly conveying its growth path centered on BTC. Another example is BTC mining company BitFuFu, which signed ATM agreements with multiple underwriting institutions in June, planning to raise up to $150 million through this mechanism and has officially filed with SEC. Its official document indicates this will help the company finance based on market dynamics without preset financing windows or trigger conditions.
However, ATM's flexibility also means higher uncertainty. Although companies need to submit registration statements to SEC (usually Form S-3) explaining issuance scale and plan, and undergo dual regulation from SEC and FINRA, issuance can occur at any point without advance price and time disclosure. This "unpredictable" issuance mechanism is especially sensitive during stock price decline, easily triggering a "more issuance when falling" dilution cycle, causing market confidence erosion and shareholder rights damage. Due to high information asymmetry, retail investors are more likely to passively bear risks in this process.
Moreover, ATM is not applicable to all companies. If enterprises lack "Well-Known Seasoned Issuer" (WKSI) status, they must follow the "one-third rule", meaning ATM fundraising cannot exceed one-third of public circulating stock market value within 12 months. All transactions during issuance must be completed through regulated brokers, and companies must disclose fundraising progress and fund usage in financial reports or 8-K documents.
Overall, ATM is a means of centralizing financing power: companies don't need to rely on banks or external fundraising, just "press a button" to raise cash for adding BTC and ETH. For founding teams, this is an extremely attractive path; but for investors, it might mean passive dilution without warning. Therefore, behind "flexibility" lies a long-term test of governance capabilities, transparency, and market trust.
Convertible Bond: "Dual-Handed" Financing + Arbitrage
Convertible Bond is a financing tool with both debt and equity attributes, allowing investors to enjoy bond interest while retaining the right to convert bonds into company stocks, providing a dual income path of "fixed income protection" and "equity potential". In the crypto industry, this tool is widely used for strategic financing, especially favored by companies wanting to raise funds for "adding BTC" without immediate stock dilution.
Its attractiveness lies in: for enterprises, convertible bonds can complete large-scale financing at low coupon rates (even zero); for institutional investors, it provides an arbitrage opportunity of "downside protection and upside stock price potential". Many mining enterprises, stablecoin platforms, and on-chain infrastructure projects have introduced strategic funds through convertible bonds. However, this also plants the seeds of dilution risk: once stock prices reach conversion conditions, bonds will quickly convert to stocks, releasing massive selling pressure and causing sudden market impact.
MicroStrategy is a typical case of using convertible bonds for "strategic reserve addition". Since 2020, the company has issued two convertible bonds, totaling $1.7 billion, all used to purchase BTC. The first bond issued in December 2020 was 5-year with only 0.75% coupon, conversion price at $398 (37% premium); the second in February 2021 was even 0% interest, 6-year, conversion price at $1,432 (50% premium), still receiving 10.5 billion dollars of oversubscription. MicroStrategy leveraged over 90,000 BTC positions with extremely low financing costs, almost zero leverage cost, achieving super BTC addition, with CEO Michael Saylor thus being called the "biggest gambler in crypto world".
However, this model is not without cost. MicroStrategy's financial leverage far exceeds traditional enterprise standards, and if BTC price significantly drops, the company's net assets might turn negative. As the IDEG report shows, when BTC falls below $17,500, MicroStrategy will face a situation of book insolvency. Additionally, since its convertible bonds are private placement, some mandatory redemption and conversion terms are undisclosed, further increasing market uncertainty about future dilution rhythm.
Overall, convertible bonds are a double-edged sword: they provide enterprises extremely high freedom between "financing without dilution" and "strategic addition", but might also trigger concentrated selling pressure at a certain moment. Especially under information asymmetry, ordinary investors often find it difficult to perceive specific conversion term trigger points, ultimately becoming the pressure bearers of dilution.
Epilogue: Beyond Narrative, Structure Reigns Supreme
On July 18, Wall Street famous short seller Jim Chanos compared this wave of "crypto treasury heat" to the 2021 SPAC frenzy - when $90 billion was raised in three months, ultimately collapsing collectively. He pointed out the difference this time is that enterprises purchase BTC through convertible and preferred stocks, but lack actual business support. "We can almost see billion-dollar announcements every day," he said, "this is exactly the same as the SPAC madness back then."
Meanwhile, a report from 'Unchained' further points out that such "crypto treasury companies" have serious structural risks. The report cites representative projects like SATO, Metaplanet, and Core Scientific, indicating that their real net asset value (mNAV) is far lower than market valuation, coupled with unclear disclosure, insufficient treasury quality, and complex structures. Once market sentiment reverses, they are likely to transform from "crypto reserves" to "financial nuclear bombs".
For ordinary investors, "corporate crypto buying" is far more complex than it appears on the surface. What you see are announcements, limit-up prices, narratives, and numbers, but what often drives price fluctuations is not the coin price itself, but the design of the capital structure.
PIPE determines who can enter at a discount and who is responsible for taking over; SPAC determines whether a company can bypass financial quality checks and directly tell its story; ATM determines whether a company continues to "sell while falling" when stock prices drop; convertible bonds determine when someone suddenly converts debt into stocks and conducts concentrated selling.
In these structures, retail investors are often arranged at the "final blow": without priority information and without liquidity guarantees. What seems like an investment "bullish on crypto" actually bears multiple risks of leverage, liquidity, and governance structure.
Therefore, when financial engineering enters the narrative battlefield, investing in crypto companies is no longer just about being bullish on BTC or ETH. The real risk is not whether the company has bought coins, but whether you can understand how it is "setting the stage".
How market value inflates through coin prices, and how it conversely releases selling pressure through structure - the design of this process determines whether you are participating in growth or becoming the fuse for the next sharp decline.
