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 completely replicable treasury model: using traditional financial instruments such as PIPE, SPAC, ATM, Convertible Bond for large-scale financing, position building, and momentum creation, while adding 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 the bag at high prices

PIPE (Private Investment in Public Equity) refers to listed companies 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 seen as a "strategic 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 introduce funds through PIPE, purchase large amounts of BTC, ETH, or SOL, and quickly reshape their identity into "strategic reserve enterprises". For example, SharpLink Gaming (SBET) saw its stock price surge 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 heavily dependent on whether the "Bitcoin strategy" can continue to attract attention. Once market sentiment reverses or regulation tightens, stock prices will quickly fall.

Unequal Institutional Priority Structure: Sponsors and PIPE investors usually enjoy enhanced voting rights, early unlocking, and pricing advantages, leaving ordinary investors at a disadvantage in both information and rights, with severe equity 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 in the early stages of listing. If retail investors massively redeem during a sentiment reversal, it will cause tight cash flow, failed expected financing, and even trigger a 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 an ETF; but when the market reverses, its complex structure and fragile governance will be more thoroughly exposed.

Related Reading: 《2024 Crypto Listing Tide: SPAC Replacing Traditional Backdoor Listings, Bitcoin Companies Collectively Rushing》

ATM: Printing Money Anytime, Issuing More When Falling

ATM (At-the-Market Offering) was originally a flexible financing tool that allows listed companies to sell stocks to the open market at market prices and raise funds in stages. 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 add positions to Bitcoin and maintain liquidity at any time.

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 Bitcoin. Unlike PIPE, which requires specific investors to participate, and unlike IPO, which requires disclosure of complex processes, it is more suitable for asset allocation companies with flexible pace and narrative-driven strategies.

For example, Canadian listed company LQWD Technologies announced the launch of 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 Bitcoin reserve capability and supports the expansion of its global Lightning Network infrastructure," clearly conveying its growth path centered on Bitcoin. Another example is Bitcoin 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 the SEC. Its official document indicates that this will help the company finance based on market dynamics without preset financing windows or trigger conditions.

Related Reading: 《Listed Company LQWD Launches ATM Plan to Quickly Increase Bitcoin Holdings》《BitFuFu Plans to Launch $150 Million ATM Financing》

However, the flexibility of ATM also means higher uncertainty. Although companies need to submit registration statements to the SEC (usually Form S-3), stating the issuance scale and plan, and subject to dual regulation by SEC and FINRA, issuance can occur at any point without advance disclosure of specific prices and times. This "unpredictable" issuance mechanism is particularly sensitive during stock price declines, easily triggering a "more issuance when falling" dilution cycle, leading to weakened market confidence 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 do not have "Well-Known Seasoned Issuer" (WKSI) status, they must also follow the "one-third rule," meaning that ATM fundraising within 12 months cannot exceed one-third of their public float market value. All transactions during the issuance process must be completed through regulated brokers, and the company must also disclose fundraising progress and fund usage in financial reports or through 8-K documents.

Overall, ATM is a means of concentrating financing power: companies do not need to rely on banks or external fundraising, just "press a button" to raise cash to add positions in Bitcoin and Ethereum. For founding teams, this is an extremely attractive path; but for investors, it may 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 and 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 the bond 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 hoping to raise funds to "add Bitcoin positions" without immediately diluting equity.

Its attractiveness lies in: for enterprises, convertible bonds can complete large-scale financing at lower coupon rates (even zero); for institutional investors, it provides an arbitrage opportunity of "downside protection and upside potential for stock price increase". Many mining companies, stablecoin platforms, and on-chain infrastructure projects have introduced strategic funds through convertible bonds. However, this also plants the seeds of dilution risk: once the stock price reaches the conversion condition, 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 Bitcoin. The first bond issued in December 2020 was a 5-year term with only 0.75% coupon, conversion price of $398 (37% premium); the second in February 2021 was even 0% interest rate, 6-year term, conversion price of $1,432 (50% premium), still receiving 10.5 billion dollars of oversubscription. MicroStrategy leveraged over 90,000 Bitcoin positions with extremely low financing costs, almost zero leverage cost, achieving super Bitcoin addition, with its CEO Michael Saylor being called the "biggest gambler in the crypto world".

However, this model is not without cost. MicroStrategy's financial leverage far exceeds traditional enterprise standards, and if Bitcoin prices significantly drop, the company's net assets may 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 in private placement form, some mandatory redemption and conversion terms are undisclosed, which also increases market uncertainty about future dilution rhythm.

Related Reading 《Unveiling the Crypto World's No. 1 "Gambler": Is MicroStrategy's Convertible Bond Strategy Reliable?》

Overall, convertible bonds are a double-edged sword: they provide enterprises with extremely high freedom between "financing without dilution" and "strategic position addition", but may also trigger concentrated selling pressure at a certain moment. Especially under information asymmetry, ordinary investors often find it difficult to perceive the specific trigger points of conversion terms, becoming the ultimate bearers of dilution.

Epilogue: Beyond Narrative, Structure Reigns Supreme

On July 18, Wall Street's famous short seller Jim Chanos compared this wave of "crypto treasury" to the SPAC craze of 2021 in a podcast program - where $90 billion was raised in three months, ultimately leading to a collective collapse and bloodbath. He pointed out that the difference this time is: enterprises are purchasing Bitcoin through convertible bonds and preferred stocks, but without actual business support. "We almost see billion-dollar announcements every day," he said, "which is exactly like the SPAC madness back then."

Meanwhile, a report from 'Unchained' further highlighted that these "crypto treasury companies" have serious structural risks. The report cited representative projects like SATO, Metaplanet, and Core Scientific, noting that their modified 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 could easily transform from "crypto reserves" to "financial nuclear bombs".

For ordinary investors, "corporate Bitcoin buying" is far more complex than it appears on the surface. What you see are announcements, limit-up movements, narratives, and numbers, but what truly drives price fluctuations is often 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 decides whether a company can bypass financial quality checks and tell its story; ATM determines if a company continues to "sell while falling" when stock prices drop; convertible bonds decide when someone suddenly converts debt to stocks and conducts concentrated selling.

In these structures, retail investors are often arranged at the "last position": without priority information and without liquidity guarantees. What seems like an "optimistic crypto investment" 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 they are "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 market crash.

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