It's important to know how these companies operate, and the risk involved, if you're thinking about investing.
In August 2020, software company Strategy (MSTR +0.06%) changed its business model when it started buying Bitcoin (BTC +1.40%). It officially rebranded as a Bitcoin treasury company in February 2025, and over 100 companies now follow the same approach.
At times, Bitcoin treasury companies have outperformed the cryptocurrency itself. While that may sound like an advantage, it's actually related to one of the dangers of this type of business.
Image source: Getty Images.
Bitcoin treasury companies don't always just buy Bitcoin with cash on hand. Many of them use debt to purchase even more. For example, Strategy has issued secured bonds and convertible bonds, along with selling stock.
It has worked, at least in terms of increasing Strategy's stockpile. The company has 671,268 BTC on its balance sheet, worth $59 billion (as of Dec. 25), by far the most of any publicly traded company.
However, leverage increases your risk, whether you're a retail investor or a corporation. Using leverage to buy a volatile asset like Bitcoin looks like a brilliant move during bull markets, but it can turn against you quickly, as we've seen with Bitcoin's recent decline.
Over the last three years, Strategy has risen by 876%, crushing Bitcoin's 420% return. But over the last six months, it's a different story. Bitcoin has lost 17% of its value, while Strategy has plummeted by 59%.
Bitcoin is risky enough for me without using any leverage. I have a small portion of my portfolio in Bitcoin and other cryptocurrencies, and I'd rather stick with owning the coins than putting my money into a Bitcoin treasury company.
Lyle Daly has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.
Making the world smarter, happier, and richer.
© 1995 – 2025 The Motley Fool. All rights reserved.
Market data powered by Xignite and Polygon.io.
About The Motley Fool
Our Services
Around the Globe
Free Tools
Affiliates & Friends
1 Thing Every Cryptocurrency Investor Needs to Know About Bitcoin Treasuries – The Motley Fool
