In traditional finance, measuring a company’s success often boils down to keeping an eye on metrics like revenue growth, earnings per share, or return on equity. But what happens when a company’s primary objective isn’t about selling products or services, but instead, accumulating Bitcoin?
This is the challenge faced by a new breed of companies, known as Bitcoin treasury firms. These are publicly listed companies with a unique mission: to acquire and hold Bitcoin for the long haul. Evaluating their success requires a fresh set of tools tailored to their core strategy.
Let’s dive into some of these tools—new key performance indicators (KPIs) that assess a company’s execution of its Bitcoin-focused strategy. These metrics, many of which have been championed by Michael Saylor at MicroStrategy, can initially seem complex. However, once understood, they provide a profound glimpse into whether these companies are truly benefiting their shareholders.
- BTC Yield: Tracking Growth Beyond Earnings
BTC Yield measures the change over time in the ratio between a company’s Bitcoin holdings and its fully diluted share count. Simply put, it reveals how much more Bitcoin is held per potential share of stock.
Why does this matter? It helps answer whether the company is accumulating Bitcoin in a way that profits shareholders. For example, if a company holds 10,000 BTC and has 100 million diluted shares (0.1 BTC per share), and a year later holds 12,000 BTC with 105 million shares (~0.114 BTC per share), that’s a 14% increase, constituting your BTC Yield.
What sets it apart is its focus on increasing Bitcoin ownership relative to share count, without concern for profit margins or EBITDA. In strategies involving equity to buy BTC, shareholders need to know if Bitcoin per share is moving up or down.
Investors can track BTC Yield over time to ensure that any increase in shares is countered by beneficial Bitcoin purchases. A consistent rise in BTC Yield indicates effective management.
- BTC Gain: Bitcoin Growth in Action
BTC Gain extends BTC Yield by applying it to the company’s initial Bitcoin balance over a period. It quantifies how many additional Bitcoins the company effectively gains through strategic behaviors.
Why is it important? It allows shareholders to visualize BTC Yield in tangible Bitcoin terms. For instance, if the quarterly BTC Yield is 5% and the company began with 10,000 BTC, BTC Gain equates to 500 BTC.
Its uniqueness lies in aiding Bitcoin-centered thinking, aligning with the firm’s broader goals. Shareholders aren’t just looking for more BTC; they want greater BTC per share. BTC Gain helps quantify how accretively the company could have grown its holdings if started from scratch.
BTC Gain proves particularly useful when comparing different periods. If one quarter shows a 200 BTC Gain and another 800, it indicates a stronger Bitcoin strategy impact in the latter, even if BTC price remains stable.
- BTC $ Gain: Converting Bitcoin Gains into Dollars
BTC $ Gain translates BTC Gain into U.S. dollars by factoring in Bitcoin’s price at the period’s end.
Why does this count? Even with a focus on Bitcoin, investors still operate in a fiat world. Translating Bitcoin growth into dollar terms aids communication between Bitcoin-specific strategies and traditional shareholder expectations.
This metric is distinct because it offers a hybrid view—Bitcoin growth evaluated in fiat terms. However, it has a caveat: BTC $ Gain can reflect a positive figure even if the company’s actual holdings value has declined, as it’s based on share-adjusted accumulation, not fair market value.
This metric allows you to contextualize the value the company’s Bitcoin acquisition strategy may have brought in dollar terms. Bear in mind, it’s about growth in stake rather than accounting gain or loss.
- Bitcoin NAV: The Raw Value of Holdings
Bitcoin NAV, or Net Asset Value, reflects the market value of a company’s Bitcoin holdings, straightforwardly calculated by Bitcoin Price × Bitcoin Count.
Why is it vital? It offers a clear snapshot of the company’s Bitcoin reserves.
Unlike traditional mutual funds or ETFs NAV, this does not account for liabilities like debt or preferred stock. It doesn’t aim to project potential shareholder payouts in liquidation. Instead, it quantifies current Bitcoin ownership and its current market worth.
Use Bitcoin NAV to grasp the scale and intent behind the company’s Bitcoin approach. A rising NAV could indicate more Bitcoin, a higher market price, or both, yet remember it’s not adjusted for financial obligations or debt.
- BTC Rating: A Clear Leverage Check
BTC Rating is a basic ratio: the market value of the company’s Bitcoin divided by its total financial obligations, showing how much of the debt and liabilities could be covered by Bitcoin holdings.
Why is this meaningful? It provides a Bitcoin-centric snapshot of balance sheet strength, enabling investors to gauge if a company’s Bitcoin strategy is supported by a robust capital structure or hindered by financial burdens.
Unlike conventional credit ratings, which depend on opaque models and institutional agreements, BTC Rating is transparent and verifiable as its inputs—Bitcoin holdings and liabilities—are publicly available. It keeps solvency visible without the need for external opinions.
A BTC Rating exceeding 1.0 indicates the company’s Bitcoin position exceeds its obligations, signaling strategic flexibility and solvency. A rating below 1.0 may hint at over-leverage or refinancing risks. Monitoring this ratio over time offers investors crucial insight into whether the company’s Bitcoin-focused strategy is responsibly managed.
Why These Metrics Work Together
Each KPI offers a unique viewpoint: BTC Yield reveals shareholder-boosting growth. BTC Gain translates it into Bitcoin terms. BTC $ Gain converts it into dollars. Bitcoin NAV displays raw Bitcoin value, while BTC Rating assesses how that value compares to liabilities.
Combined, they deliver an all-encompassing view of whether a Bitcoin treasury company is expanding its stake effectively, preserving or elevating shareholder value, and managing associated risks wisely.
One Final Note: Imperfections of These Metrics
These KPIs aren’t traditional financial metrics—they ignore aspects like operational revenue, cash flow, or debt service costs, and they presume convertible debt will convert rather than mature.
They’re tailored to isolate the Bitcoin strategy, not the entire business, and should accompany financial statements, not replace them.
For investors assessing a company’s prowess in the Bitcoin domain, these metrics provide unparalleled clarity on whether equity and capital are being used to truly grow Bitcoin per share.
In a Bitcoin-focused world, that could be the most vital metric we have.
Disclaimer: This article was written on behalf of Bitcoin For Corporations and is intended solely for informational purposes, not as an invitation or solicitation to buy, hold, or subscribe for securities.
