Warren Buffett, the renowned investor from America and known for his skepticism towards Bitcoin, frequently describes Berkshire Hathaway’s substantial cash reserves as a “elephant gun.” The company’s extensive assets suggest that any major investment or acquisition must be considerable to make a difference.
A similar principle is emerging within the bitcoin treasury company sector, to exert significant influence in the corporate bitcoin landscape—or to carve out a meaningful role in the future financial framework of Bitcoinizing finance—you need a substantial amount of bitcoin. Even Nakamoto’s acquisition of a substantial amount translated to just 5,000 units. Unlike Buffett’s domain, where substantial investments are precisely assessed, the bitcoin treasury market still displays inconsistencies. Many cryptocurrencies are currently trading at prices lower than the market value of their bitcoin assets, presenting potential opportunities for savvy acquisitions.
Recent market shifts emphasize this dynamic. Semler Scientific, a healthcare company that has pivoted to become a bitcoin treasury firm with a holding of 5,021 BTC, is currently trading below the market value of its bitcoin, positioning it as a prime target. Enter Strive, which has proposed an all-share acquisition of Semler, acquiring 5,886 BTC in the process—immediately facing a decline of about 3%, resulting in a $20 million paper loss. The agreement highlighted a “210% premium,” although a significant portion of this reflects Strive’s own inflated valuation rather than the true value of bitcoin. Semler experienced a significant increase of nearly 30% in early trading, ultimately finishing the day with an approximate rise of 11%, while Strive saw a decrease of about 11% for the day. The Strive deal, from a financial perspective, involves converting 17,051,000 fully diluted Semler shares into 21.05 ASST shares each, which effectively values the company at $1.4 billion. 564 million of this total is attributed to the bitcoin holdings, while the rest is allocated to Semler’s cash-flow-positive healthcare operations. Last year, Semler achieved an impressive $49 million in free cash flow, leading to a price-to-free-cash-flow ratio of 17 for its operating business, aligning with comparable valuations in the healthcare sector.
This merger highlights the distinct features of transactions in this context. While it might seem more effective for Strive to obtain $1.3 billion in cash and buy bitcoin directly on the open market, the inherent inefficiencies tied to trading large amounts of bitcoin make stock-for-stock mergers a practical option. As Matt Levine noted, transactions often involve lower-premium firms being acquired by those with higher premiums. The current trend of corporate bitcoin acquisitions continues to gain momentum, with the Semler-Strive deal illustrating how financial engineering can provide strategic advantages within the BTCTC ecosystem.
The landscape is buzzing with holdings, treasury inflows, and undervalued corporate bitcoin assets, making it an exhilarating frontier for investors looking to gain exposure to bitcoin without engaging in direct market purchases. BTC Inc, the parent company of Bitcoin Magazine, has established an affiliation with Nakamoto and offers marketing services to Semler Scientific and Strive through its Bitcoin For Corporations platform, thereby connecting these corporate bitcoin initiatives to the larger ecosystem.