Bitcoin (BTC) prices hit all-time highs in 2025, which seemed to catch the attention of corporate treasurers because several companies have recently added bitcoin to their corporate treasury holdings. That raises interesting questions for retail investors: how will this impact the fundamentals of these companies, and what could it mean for the future of bitcoin and other cryptocurrency holdings?
Other companies have gone further and added bitcoin as part of their business strategy, using debt or offering stock to raise money to buy and store more bitcoin. Sometimes called bitcoin treasury companies, these companies include Strategy (MSTR), Bit Digital (BTBT), and Block (XYZ). GameStop (GME) stock initially jumped after it announced in March 2025 that it would add the cryptocurrency to its treasury reserve assets by selling debt that can be converted into equity.
Even if a company doesn't shift its entire business strategy to buying bitcoin, businesses that added it have claimed bitcoin and other digital assets offer additional flexibility for financing and give investors new ways to invest in digital assets. Proponents also argue it could offer protection against inflation and diversification from other cash assets, potentially reducing portfolio risk.
However, its value as an inflation hedge remains a matter of speculation and is unpredictable. And there's plenty of risk with bitcoin broadly, especially when it comes to adding it to a reserve if the company has little or nothing to do with cryptocurrency.
Why add cryptocurrency to a corporate treasury fund?
Corporate treasury reserve funds, or holdings, serve as a company's checking account and help manage liquidity, debt, and financing needs. These resources fund daily operations and provide a cushion against unforeseen shortfalls.
If a company doesn't have enough cash on hand to cover its bills, its treasurer may take out short-term loans using commercial paper or line of credit capabilities. For companies with international operations, the treasury department manages exchange rate exposure, so many businesses hold reserves in multiple currencies. Public companies report these funds on their balance sheet as cash and equivalents.
Crypto has elements of currency, so it could make sense for a business that buys or sells goods and services denominated in cryptocurrency to have exposure to it in treasury reserve funds. In this situation, a cryptocurrency company having crypto treasury holdings could be compared to a multinational retailer holding British pounds or Japanese yen.
Because cryptocurrencies like bitcoin aren't centralized at a bank, and instead are traded between buyers and sellers directly or via crypto exchanges, advocates argue they have liquidity similar to cash while also offering different diversification qualities than other currencies. Crypto transactions are tracked through blockchain technology rather than bank accounts. Although there are uses for both cryptocurrency and blockchain, the value of crypto coins is more speculative than transactional.
At the same time, supporters claim crypto has an advantage over traditional currencies because these digital currencies could potentially resist the effects of inflation. The amount of some cryptocurrencies, including bitcoin, that can be issued is fixed, offering a potential hedge against inflation, which can be affected by changes in the amount of currency in circulation. These supporters also argue that it may be useful as collateral for short-term borrowing, and it could help companies diversify their balance sheets. However, there's no long-term track record of crypto being a true hedge. Throughout much of 2021 and 2022, bitcoin experienced both sharp rallies and sharp declines even though inflation data consistently ticked higher. However, as bitcoin gained significantly as rates started to decline in 2023, it began looking significantly less like an inflation hedge.
Different crypto treasury-holding structures
If a company has operating exposure to cryptocurrency, including it in its holding, or reserve fund, is one way to manage this exposure risk. MARA Holdings (MARA), Block, and Coinbase (COIN) have crypto reserves and also do business in cryptocurrency. Another firm, CleanSpark (CLSK), is a crypto miner, so it accumulates bitcoin as it operates.
Other companies that have operations outside of crypto may be more focused on storing cash and attracting investors' interest in speculating on crypto. The company Strategy, for example, technically sells enterprise analytics software that's outside of the realm of cryptocurrency. But most of its valuation comes down to being a large crypto treasury holder, and the company said in a regulatory filing its shift toward a bitcoin treasury business strategy is designed to "provide investors with varying degrees of economic exposure" to bitcoin. Therefore, Strategy has now become a holding company for bitcoin. Notably, Tesla (TSLA), which has little operating exposure to digital coins, purchased $1.5 billion of bitcoin in 2021 in order to "maximize our returns on cash," it said at the time.
There is, of course, the potential for the opposite to happen. Crypto is far more volatile than traditional corporate treasury reserve currencies. When valuing bitcoin treasury companies, investors need to account for the effects of the currency holdings on the balance sheet. The company Strategy, for example, held 506,137 BTC, with a value of about $42 billion as of March 31, 2025, or about 59% of its market capitalization. Tesla held 11,509 BTC at the end of 2024, worth about a billion dollars. That's teeny in comparison to Tesla's $758 billion market capitalization, so its value may be less exposed to near-term price fluctuations or long-term questions about crypto's viability.
Risks of crypto on the balance sheet
Bitcoin treasury holdings may help companies with crypto exposure manage risk, but there are a couple questions investors may want to ask before considering buying any stocks of businesses that are rushing to add cryptocurrency:
- Is the addition to the balance sheet something that may be distracting the management teams from their core businesses?
- Are managers adding cryptocurrency to distract investors from unrelated operating problems? (After all, investors are able to buy crypto exposure on their own, either directly or through bitcoin ETFs and futures contracts.)
- What is the outlook for the price of bitcoin and other cryptocurrencies?
Crypto assets can cause some accounting trouble too. Public companies use mark-to-market accounting for crypto investments, meaning that they reflect their crypto treasury holdings at their market value each reporting period. If the value increases, the amount of the increase will be added to the income statement as an unrealized gain. If it decreases, it will show up as an unrealized loss. This could lead to balance sheet and earnings volatility. And, if a company has significant crypto holdings that fall in value, it could experience a liquidity crisis.
Keep in mind, the reserve fund holdings for crypto are not safe from fraud and theft. In February 2025, cryptocurrency exchange Bybit lost $1.5 billion worth of ethereum to hackers, the largest known crypto heist. Bybit's security was believed to be state of the art, emphasizing the additional risk there may be for companies' balance sheets.
Bottom line
Strategy made its commitment to cryptocurrency in 2020 and helped create the framework for bitcoin treasury-holding companies, which can offer another way for investors to gain exposure to cryptocurrencies. For some folks, buying crypto by investing in a treasury company, especially one that also has an operating business in addition to the treasury holdings, may be a better proposition than buying crypto outright, buying a bitcoin ETF, or trading crypto options. But some of the benefits, such as hedging that supporters claim it offers haven't yet been verified, and risks, such as potential scams and high volatility, remain a real potential consequence that investors should consider when debating whether to get involved with cryptocurrencies.
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Cryptocurrency-related products carry a substantial level of risk and are not suitable for all investors. Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment in the fund. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Some cryptocurrency-related products use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency, which may result in unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended. Please read more about risks of trading cryptocurrency futures here.
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