As shown in the preceding table, the $1B stock buyback generates an inferior “yield” compared to using the same proceeds and buying ETH. The intuition is straightforward – the reason is that it’s a choice of buying stock at a premium to NAV or the underlying assets at NAV. The cheaper option, therefore, results in a higher “yield.”
Share Repurchase Used to Sop up Liquidity
Why might the company choose to repurchase its stock rather than accumulate more ETH? One likely reason is to support the share price following selling pressure from the recently registered $250 million PIPE (Private Investments in Public Equity). The resale registration statement was filed and deemed effective on July 9, 2025, enabling PIPE investors to freely sell their shares on the open market. Notably, the stock declined by approximately 40% that day, likely reflecting the impact of sudden supply from PIPE-related selling. Even with the precipitous drop that day, PIPE investors made nearly 15x their money (using the July 9th close). Not bad for holding the investment for (checks calendar) 9 days.
Speed to Registration is the Key
Which brings us to our final point – lockups. In these transactions, equity investors typically participate in PIPEs at or near net asset value (1x mNAV), implicitly agreeing that “yes, your $1 of investment is worth $1 of stock.” When the deal is announced, the stock of the treasury company often “goes up a lot” – a technical measure, we know. At this point, PIPE investors are sitting on paper gains, having received $1 of stock for each $1 invested, with proceeds earmarked for acquiring the company’s favorite cryptocurrency.
Following the deal announcement, the treasury company rushes to finalize the deal and, critically, register the newly issued shares. Once the registration statement becomes effective, those shares, except for any under contractual lockup (typically affecting founders or the management team), are freely tradable. PIPE investors, in most cases, face no such lockups; their shares are simply registered and then eligible for sale.
Now, there are nuances to how quickly the deal can close and how fast the shares can be registered, but for PIPE investors, expediency is key, particularly if the stock price is above NAV. We don’t want to trivialize this part of the process. While BMNR may illustrate how quickly this can happen, many other treasury company deals announced months ago have yet to close or register their shares.
It’s also important to recognize the market dynamic at play: when a company sells 95%+ of its shares to new investors, as many of these deals do, those shares can flood the market once the lockup period ends. The result? Downward pressure on the stock price. This is what BMNR is likely trying to mitigate with its share repurchase agreement.
The Case of TRON, Tron, and TRX
There’s one final observation we have from our non-exhaustive, but exhausting, analysis of crypto treasury deals involving SRM Media, the manufacturer of stuffed animals, water bottles, and children’s toys, and owner of a media library that solely contains the 2019 movie “The Kid” starring Ethan Hawke. The company underwent massive change recently, pivoting to become a TRON (TRX – the cryptocurrency) treasury company, changing its name to Tron Inc. and ticker to TRON, naming TRON (the blockchain) founder Justin Sun as a special advisor, and engaging in a $100M Convertible Preferred PIPE, funded entirely with TRON (TRX) tokens, and whose investor base consists solely of Justin Sun’s dad. A registration statement appears to have been filed, but not deemed effective yet. Still the deal has generated a cool ~17x (paper) return, which, with warrants could amount to (again paper) profits of $3.3B (there are some restrictions here).
Final Thoughts
Crypto treasury companies continue to proliferate, and we likely haven’t seen the end of them. To the extent this capital markets trick continues to work, investors will continue to utilize it. While there are reasons why these companies should trade at premiums to NAV, chiefly their ability to issue debt instruments, there’s no guarantee they will continue to do so in the future. We’ve already seen premiums to NAV compress over time, even when shares have yet to be registered for sale. For companies only issuing equity for crypto purchases, the phenomenon is even more puzzling. ETFs are essentially the same instruments, issuing stock for the underlying, and do not trade at premiums to NAV. We think that’s something investors should think about.
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