DAT Company: A Concept in Transition

Author: James Butterfill, Source: CoinShares Research, Translation: Shaw Jinse Finance

Over the past two years, Digital Asset Treasury (DAT) companies have become one of the most watched sectors in the cryptocurrency market. Since CoinShares operates a blockchain equity index, this is also a topic we often delve into. As the DAT sector and its credibility have rapidly grown, its positioning has become increasingly blurred. The recent market correction has put pressure on some major DATs, so it is necessary for us to re-examine the original intention of DATs, their development history, and what the recent market downturn and shrinking net asset value mean for their future development.

The Original Intention and Core Positioning of DATs

To understand the current situation, we need to look back at the initial motivation for creating DATs. The core goal of DATs is to serve multinational companies with multi-currency revenue streams that need to manage funds and foreign exchange risks. For these companies, Bitcoin offers an attractive hedging tool that can effectively address risks such as quantitative easing, rising government debt, and long-term currency depreciation. Incorporating Bitcoin into the balance sheet is not a speculative move, but a fund management strategy, as Strategy’s first announcement in August 2020 demonstrated. In addition, this aligns with the growing interest of many enterprises in distributed ledger technology and the potential efficiency gains from integrating blockchain infrastructure into existing operations.

Strictly speaking, DATs refer only to companies holding Bitcoin or other crypto assets on their balance sheets. The market has gradually set an implicit threshold: companies must hold a considerable proportion of crypto assets (usually more than 40% of net asset value) to be classified as DATs. As the pace of crypto purchases accelerated and valuations soared, they often overshadowed the companies’ core businesses. Strategy is the most obvious example: what was originally intended as a diversification initiative actually became a leveraged Bitcoin investment tool. Many new entrants have imitated similar practices, issuing shares not to grow the business, but to accumulate more digital assets. However, over time, this has weakened interest and capital inflow into the sector, while also raising questions about the sustainability of these strategies. Subsequently, these companies began to use every available financing channel to rapidly increase their crypto holdings, hoping that price appreciation would make up for the lack of core business growth.

DAT Behavior Logic and Challenges Amid Market Pullback

The recent cryptocurrency market pullback has exposed these structural flaws. There are many reasons for this downturn, including the lack of robust operating businesses to support their fund management strategies, capital shifting to other blockchain-related stock investments (such as mining businesses), and the overall decline in crypto prices. For many such companies, their traditional businesses are losing money, which may create some selling pressure, though this is usually small compared to their digital asset holdings. Bitmine (BMNR) is a typical example: in its last fiscal quarter, the company’s operating cash outflow was only $5 million, while its Ethereum (ETH) reserves were worth more than $10 billion. Japan-based Metaplanet’s operating cash flow is also negligible compared to its $2.7 billion in Bitcoin holdings.

On the other hand, dividend and interest payments may create more urgent selling needs, especially when liquid fiat resources are scarce. However, most DATs finance themselves by issuing shares, and their debt burdens are relatively low. The only exception is Strategy, which has $8.2 billion in outstanding debt and has issued $7 billion in dividend-preferred stock. Strategy’s liabilities generate about $800 million in annual cash flow commitments, which the company has financed through further fundraising. To dispel concerns about its solvency, Strategy again used its at-the-market (ATM) mechanism to issue $1.4 billion as reserves for preferred dividends and interest payments. DAT companies will use every available means to avoid selling their digital asset reserves, and so far, the major DATs we track have not made any large-scale sales this year.

However, the problem remains: what happens when mNAV (market value to net asset value ratio) falls below 1x? Contrary to popular belief, this scenario is not entirely hopeless. Companies holding crypto can still boost per-share crypto holdings by reversing their accumulation strategy. In this situation, the company would sell crypto and buy back shares, thereby increasing per-share token holdings. While this approach is reasonable, we believe that management teams striving to scale up their businesses are unlikely to proactively reduce their crypto holdings, which may cause their holding growth to stall until the financing environment improves. Finally, companies trading below their crypto net asset value may become attractive acquisition targets, as better-capitalized firms may view them as a way to acquire digital assets below cost.

Has the DAT Bubble Burst?

In many ways, yes. In the summer of 2025, many of these companies were trading at 3x, 5x, or even 10x their net asset value, but now they’re hovering at 1x or even lower. Next, the market will diverge: either prices will drop further, triggering disorderly selling and a market crash; or companies will continue to hold assets and wait for prices to recover. We lean toward the latter, especially considering the improving macroeconomic backdrop and the possibility of a rate cut in December, which would support the broader crypto market.

However, in the long run, the DAT model needs to evolve and change. Investors will become less tolerant of equity dilution and highly concentrated assets with little substantive revenue sources. The original intention of quality companies to diversify fiat risk has been overshadowed by the many firms using public equity markets to build massive assets rather than real businesses, undermining the credibility of the entire sector.

Encouragingly, a batch of stronger companies have begun to incorporate Bitcoin into their balance sheets for strategic purposes. However, under the current informal definition, these companies should not be considered DATs at all. Ironically, the companies that most closely fit the original monetary hedge/forex management strategy—such as Tesla, Trump Media Group, and Block Inc.—are currently excluded from this label.

The Future Direction of the DAT Concept

The bursting of the DAT bubble does not mean the end of the DAT concept. On the contrary, we expect the market to readjust. Investors will increasingly distinguish between the following:

• Speculative DATs: Core business is secondary, with value almost entirely dependent on token holdings.
• Asset reserve-oriented DATs: Treat Bitcoin or other digital assets as part of a rigorous forex and fund reserve strategy.
• Token investment companies: Firms holding diversified token portfolios, possibly akin to closed-end funds rather than traditional companies.
• Strategic enterprises: Add Bitcoin to the balance sheet as a macro hedge, but do not seek to be classified as DATs.

The past year has shown that the term “DAT” can mean everything or nothing at all, so the industry will move toward clearer classifications.

Conclusion

DATs were born from a reasonable idea: enterprises diversify by shifting reserves from fiat currency to digital assets. However, the rapid expansion of token reserves, equity dilution, and the relentless pursuit of per-share token growth have all undermined this original intention. As the bubble bursts, the market is reassessing which companies truly fit the DAT model and which are simply opportunistic.

The future of DATs lies in a return to basic principles: rigorous financial management, reliable business models, and realistic expectations for the role of digital assets on corporate balance sheets. The next generation of DAT companies will be closer to the original vision: stable, globalized businesses that use digital assets strategically, not speculatively.