The Endgame of DAT: Liquidation or Self-Rescue

Original Title: When DAT Wrapper Cracks

Author: Prathik Desai

Translation and Editing: BitpushNews

More than a year ago, for many companies seeking to boost their stock prices, becoming a digital asset treasury seemed like an easy decision.

Some Microsoft shareholders gathered to ask the board to evaluate the benefits of including some Bitcoin on their balance sheet. They even mentioned Strategy (formerly MicroStrategy), the largest publicly listed Bitcoin DAT.

At the time, a financial flywheel was attracting everyone.

Buy large amounts of BTC/ETH/SOL. Watch the stock price rise above the value of these assets. Issue more shares at a premium. Use the proceeds to buy more cryptocurrencies. Repeat. This financial flywheel supporting publicly traded stocks seemed almost perfect, enough to tempt investors. They paid over two dollars just to gain indirect exposure to Bitcoin worth only one dollar. It was a crazy era.

But time tests the best strategies and flywheels.

Today, with the total crypto market cap having evaporated over 45% in the past four months, most of these packaged companies’ market-to-net asset value ratios have fallen below 1. This indicates that the market values these DAT companies below the worth of their crypto treasuries. This has changed how the financial flywheel operates.

Because a DAT is more than just a packaged asset. In most cases, it’s a company with operating expenses, financing costs, legal and operational fees. During the mNAV premium era, DATs funded their crypto purchases and operational costs by selling more shares or raising more debt. In the mNAV discount era, this flywheel collapses.

In today’s analysis, I will show what the persistent mNAV discount means for DATs and whether they can survive in a crypto bear market.

Between 2024 and 2025, over 30 companies are vying to transform into DATs. They are building treasuries around blue-chip coins like Bitcoin, ETH, and SOL, and even meme coins.

At the peak on October 7, 2025, the value of cryptocurrencies held by DATs was $118 billion, with these companies’ total market cap exceeding $160 billion. Today, the value of cryptocurrencies held by DATs is $68 billion, and their discounted total market cap is just over $50 billion.

All their fates hinge on one thing: their ability to package assets and craft stories that justify a valuation premium over the asset value. That difference becomes the premium.

The premium itself becomes a product. If the stock trades at 1.5 times mNAV, a DAT can sell stock worth $1 and buy crypto exposure worth $1.50, describing the transaction as “value-added.” Investors are willing to pay the premium because they believe DATs can continue selling stock at a premium and use the proceeds to accumulate more crypto, increasing the crypto assets per share over time.

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The problem is, premiums don’t last forever. Once the market stops paying extra for this packaging, the “sell stock to buy more crypto” flywheel stalls.

When stocks no longer trade at 1.5 times their asset value, the amount of crypto bought with each new share issuance decreases. The premium turns into a discount.

Over the past year, leading BTC, ETH, and SOL DATs have seen their stock prices decline more than the cryptocurrencies themselves.

Once the stock’s premium over the underlying assets disappears, investors naturally ask: why can’t they buy crypto directly elsewhere, such as on decentralized or centralized exchanges, or through exchange-traded funds, at a cheaper price?

Bloomberg’s Matt Levin posed an important question: if the trading price of a DAT doesn’t even reach its net asset value, let alone a premium, why wouldn’t investors push the company to liquidate its crypto treasury or buy back shares?

Many DATs, including industry leaders like Strategy, try to convince investors that they will hold their crypto through the bear cycle, waiting for the premium era to return. But I see a more critical issue: if DATs cannot raise additional funds in the foreseeable long term, where will they get the money to operate? These DATs have bills and salaries to pay.

Strategy is an exception, for two reasons.

• According to reports, it holds $2.25 billion in reserves, enough to cover its dividend and interest obligations for about 2.5 years. This is important because Strategy no longer relies solely on zero-interest convertible bonds for funding. It has also issued preferred instruments that require paying substantial dividends.

• It also has an operational business, no matter how small, that generates recurring revenue. In Q4 2025, Strategy reported total revenue of $123 million, with a gross profit of $81 million. While Strategy’s net profit can fluctuate significantly each quarter due to changes in crypto asset prices valued at market, its business intelligence division is its only tangible cash flow source.

But this still doesn’t make Strategy’s strategy foolproof. The market can still punish its stock—as it has over the past year—and weaken Strategy’s ability to raise funds at low cost.

While Strategy might survive the crypto bear market, emerging DATs lacking sufficient reserves or operational businesses to cover their inevitable expenses will feel the pressure.

This distinction is even more apparent in ETH-based DATs.

The largest Ethereum-based DAT—BitMine Immersion—has a marginal operational business supporting its ETH treasury. In the quarter ending November 30, 2025, BMNR reported total revenue of $2.293 million, including consulting, leasing, and staking income.

Its balance sheet shows the company holds $10.56 billion in digital assets and $887.7 million in cash equivalents. BMNR’s operations resulted in a net negative cash flow of $228 million. All cash needs are met by issuing new shares.

Last year, because BMNR’s stock traded at a premium to mNAV most of the time, raising funds was relatively easy. But over the past six months, its mNAV has fallen from 1.5 to about 1.

So what happens when the stock no longer trades at a premium? Issuing more shares at a discount could lower the ETH price per share, making it less attractive to investors than directly buying ETH from the market.

This explains why BitMine announced last month a $200 million acquisition of shares in Beast Industries, a private company owned by YouTube influencer Jimmy “MrBeast” Donaldson. The company said it would “explore ways to collaborate on DeFi projects.”

ETH and SOL DATs might also argue that staking income—which BTC DATs cannot boast—can help them survive market crashes. But that still doesn’t solve the issue of meeting cash flow obligations.

Even with staking rewards (accumulated in ETH or SOL), as long as these rewards aren’t converted into fiat currency, DATs can’t use them to pay wages, audit fees, listing costs, or interest. Companies must either have sufficient fiat income or sell or re-mortgage their treasury assets to meet cash needs.

This is clearly demonstrated by the largest SOL holder—Forward Industries.

FWDI reported a net loss of $586 million in Q4 2025, despite earning $17.381 million in staking and related income.

Management explicitly stated that their “current cash balance and working capital are sufficient to meet our liquidity needs at least until February 2027.”

FWDI also disclosed a proactive capital-raising strategy, including issuing stock at market prices, buybacks, and a tokenization experiment. However, if the mNAV premium persists long-term, all these efforts may fail to manage its packaging price effectively.

The Road Ahead

Last year’s DAT craze centered on the speed of asset accumulation and the ability to raise funds through premium share issuance. As long as the packaging trades at a premium, DATs can continue converting expensive equity into more crypto per share, calling it “beta.” Investors also pretend the only risk is the asset price itself.

But premiums won’t last forever. Crypto cycles can turn them into discounts. I first raised this issue shortly after the October 10, 2022 liquidation event when I observed the first signs of premium decline.

However, this bear market will push DATs to evaluate: once their packaging no longer trades at a premium, should they still exist?

One way to address this dilemma is for companies to improve operational efficiency, using a profitable business or surplus reserves to supplement their DAT strategy. Because when the story of a DAT can no longer attract investors in a bear market, a conventional company story will determine survival.

If you’ve read the article “Strategy & Marathon: Faith and Power,” you’ll recall why Strategy has remained resilient across multiple crypto cycles. But a new wave of companies—including BitMine, Forward Industries, SharpLink, and Upexi—lacks that same strength.

Their current attempts at staking income and weak operational businesses may collapse under market pressure unless they consider other options to cover real-world obligations.

We saw this with ETHZilla, an Ethereum treasury company that last month sold about $115 million worth of ETH holdings and bought two jet engines. Subsequently, the DAT leased the engines to a major airline and hired Aero Engine Solutions for monthly management fees.

Looking ahead, investors will evaluate not only crypto accumulation strategies but also the conditions for their survival. In the ongoing DAT cycle, only those that can effectively manage dilution, debt, fixed obligations, and trading liquidity will weather the downturn.