Why Are Investors Bet Big on Ethereum Treasury Firm?

     According to the Korea Securities Depository, the top net purchase among overseas investments by Korean investors in the third quarter of 2025 was Bitmine Immersion Technologies, a U.S.-based company. Bitmine, a bitcoin cryptocurrency mining firm that went public on June 25, 2025, has attracted significant attention from domestic and international investors after its stock price surged following the announcement of an Ethereum accumulation strategy. The recent appointment of Wall Street veteran Tom Lee as chairman of Bitmine’s board appears to have further fueled enthusiasm among South Korean investors. Meanwhile, venture investor Peter Thiel has also acquired a substantial stake in a cryptocurrency company that stockpiles Ethereum, drawing market attention to firms that hoard altcoins.

What are DAT Companies?
     Digital Treasury Companies (DAT) are firms that incorporate cryptocurrencies such as Bitcoin as core assets in their corporate treasury. Companies hold various forms of assets in anticipation of generating future cash flows. While traditional corporate treasury assets include stocks, bonds, and short-term deposits, DAT companies accumulate digital assets with high liquidity and price volatility to strengthen their competitive edge. Representative DAT companies include Strategy, which stockpiles Bitcoin, Bitmine, which hoards Ethereum, and Upexi, which accumulates Solana. DAT companies raise capital through the premium associated with their strategy and convert that capital into more cryptocurrency to increase their holdings. The market-cap-to-net-asset-value multiple (mNAV) ratio indicates how much a company’s stock trades above its net asset value per share, and based on this premium, companies raise capital through institutional investor funding or issuing new shares.

Why Cryptocurrency?
     Cryptocurrencies are being chosen because, like Bitcoin, they are not centralized through central banks and enable direct transactions between buyers and sellers, providing cash-like liquidity while offering diversification for cash reserves. Proponents of cryptocurrency reserves also argue that cryptocurrencies offer advantages over traditional currencies in terms of inflation. This argument is based on the fact that most cryptocurrencies have limited supply, which offsets inflationary risks associated with changes in the money supply. Additionally, if companies operate cryptocurrencies for purposes other than reserves, they can include cryptocurrency in their holdings or reserves to reduce operational risk.

Why Ethereum?
     Unlike Bitcoin, which relies on price appreciation, Ethereum generates yield through its Proof-of-Stake (PoS) mechanism, offering a 3-5% annual yield from staking. Additional yield (8-14%) is possible by participating in Decentralized Finance (DeFi) protocols. Ethereum is also the dominant platform for tokenizing real-world assets, attracting institutional capital, and allowing corporations to act as market participants.

Structural Problems of DAT Corporations?
     DAT corporations trade at a premium based on mNAV. This strategy is vulnerable in a bear market, as stock prices fall, the company loses its momentum to purchase cryptocurrency. Financial stability is also threatened if investors in their convertible bonds short-sell the stock. Additionally, hacking remains a significant risk, as evidenced by the 2025 Bybit hack, undermining crypto’s viability as a reserve asset.

A New Strategy for DAT Corporations (M&A)
     On September 25, 2025, Strive, a company that transitioned from an asset management firm to a Bitcoin treasury corporation, acquired Semler Scientific, a fellow DAT corporation. With the Bitcoin treasury market saturated with public companies, mergers and acquisitions (M&A) is being discussed as one method for DAT corporations to grow, as it can significantly increase their cryptocurrency holdings.

     According to David Duong, Head of Research at Coinbase, as the market cycle matures, it will consolidate under a few large players. The M&A strategy allows a company to acquire the target’s cash-flow-generating business, enabling the purchase of more cryptocurrency. Unlike financing methods such as issuing new shares, this approach allows for the purchase of more cryptocurrency through a merger with a legitimate business entity without diluting stock value.
     In the current market, companies reserving altcoins are also emerging. The resulting stock volatility, detached from fundamentals, shows market interest in this new financial model. However, without verified risk management and a sustainable business model, this trend could be a speculative bubble, requiring close investor scrutiny. 

Kim Jung-su (ST Reporter)

jungstudy2160@soongsil.ac.kr

Lee Geon-yong (ST Reporter)

rjsdyd0414@soongsil.ac.kr