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As Bitcoin evolves into a more established asset class, the companies built around it are evolving as well. Early public-company activity centered on exchanges, wallets, and other Bitcoin-commerce services, followed by the institutionalization of Bitcoin mining. A newer phase is now taking shape as public companies are holding Bitcoin as a treasury reserve and developing strategies, risk management practices, financing structures, and operating processes around those holdings.
This evolution is giving rise to digital asset treasury companies (DATs) and raising broader questions about how Bitcoin-related activities fit within a company’s business model. In practice, DATs may raise capital through equity and debt issuances, acquire and hold Bitcoin in custody, manage risk, and use their holdings as a central part of their business model. Some DATs pair these holdings with lending arrangements, collateralized borrowings, preferred stock programs, and hedging or liquidity policies. These activities are supported by dedicated personnel, governance processes, and performance metrics. The nature, scale, and sophistication of these activities vary widely across companies, which makes it difficult to characterize every company described as a DAT in the same manner.
The emergence of these models has prompted questions from investors, regulators, accountants, tax authorities, and other market participants about business models in which management actively allocates capital, executes financing strategies, manages risk, and seeks to create enterprise value through Bitcoin-related activities.
Why the Activities Around Bitcoin Matter
The role Bitcoin plays within a business, along with the activities, processes, and management oversight surrounding it, is relevant to understanding the substance of the company’s business model.
Bitcoin can play very different roles from one company to the next. For some companies, Bitcoin functions primarily as a passive store of value held in reserve. For others, Bitcoin may be central to a broader strategy in which management is active in recurring capital formation, executing financing transactions, overseeing liquidity and risk management, pursuing lending or collateral arrangements, and other coordinated activities. These activities may be supported by dedicated personnel, formal governance processes, discrete financial information, performance measures, and regular management review. These facts and circumstances regarding the assets a company owns, and the activities, processes, financial information, management oversight, and overall strategy associated with them are important context. Assessing the nature and substance of these different Bitcoin-related activities is therefore essential to properly evaluating these companies.
What ultimately differentiates Bitcoin-related companies may not be the Bitcoin itself, but the capabilities built around it. Capital formation, treasury optimization, structured financing, collateral management, risk oversight, and strategic deployment of digital assets are all activities that require judgment, infrastructure, and execution. As these capabilities mature, stakeholders may increasingly view leading DATs not as passive holders of Bitcoin, but as businesses that leverage Bitcoin as a platform for creating shareholder value.
How Markets View These Companies
Every industry is built on assets to generate value. Airlines deploy aircraft, energy companies develop resource reserves, banks allocate capital, and software companies monetize intellectual property. Bitcoin similarly functions as a foundational asset: exchanges facilitate trading, custody, and market-making services; miners generate revenue through the deployment of computing infrastructure; and DATs may leverage Bitcoin holdings as part of broader strategies to create shareholder value. Assessing the nature and substance of these different Bitcoin-related activities is important to properly evaluate such companies.
A key valuation metric has emerged to value these companies: multiple of Net Asset Value (mNAV). Generally, mNAV compares a company’s enterprise value with the value of its Bitcoin holdings and, in a way, functions as a price-to-book ratio for DATs. For example, DATs typically trade between 1.0x to 2.0x multiples. When investors assign values that exceed the underlying value of Bitcoin holdings (e.g., DATs trade at multiples in excess of 1.0x), it may indicate that the market is considering factors beyond the asset balance itself. These factors could include capital allocation decisions, financing strategies, treasury management activities, risk management processes, and a company's ability to generate future opportunities from its Bitcoin-related activities.
Accounting Considerations
There is no accounting standard in U.S. GAAP specific to DATs. Companies should consider relevant authoritative guidance and their specific facts and circumstances when determining the appropriate accounting and reporting, which may include the following:
- Broker-Dealers and Investment Companies — Companies that are within the scope of ASC 940, Financial Services — Brokers and Dealers, and in ASC 946, Financial Services — Investment Companies, must apply that specific guidance when accounting for Bitcoins. Companies outside the scope of that guidance cannot analogize to industry-specific guidance.
- Bitcoin Acquisition and Holding — ASC 350-60: DATs that purchase Bitcoins and hold them for treasury purposes would generally account for Bitcoins under ASC 350-60 because Bitcoins would meet all the scoping conditions under ASC 350-60-15-1. Further, DATs would initially recognize Bitcoins at its acquisition cost and subsequently measure the Bitcoins at fair value, with changes recognized in earnings every reporting period. Refer to BDO Knows: Accounting for Cryptocurrencies, for further guidance.
- Lending and Borrowing Bitcoin — ASC 326 and ASC 815: DATs may use Bitcoin holdings to regularly lend and borrow them. As a lender, DATs should consider whether it has lost control of Bitcoins and therefore can derecognize them. This analysis can be complex and requires significant judgment by DATs based on the facts and circumstances of the arrangement. If the Bitcoin can be derecognized, DATs as a lender recognizes an asset to reflect its right to receive Bitcoins back from the borrower. Conversely, if the DAT is the borrower and it obtained control of the Bitcoins, it must recognize an offsetting obligation to return the Bitcoins back to the lender. This obligation to return Bitcoins is a financial instrument that must be accounted for under ASC 815. Refer to Question 25 and 26 in the AICPA’s Accounting For and Auditing of Digital Assets Practice Aid.
- Business Combinations — ASC 805: Under ASC 805, a business is an integrated set of activities and assets that is capable of being conducted and managed to provide a return. When a company pairs its Bitcoin (an input) with substantive processes — capital-raising strategies, credit and lending programs, risk management, and a workforce — to produce outputs and returns, it may meet the definition of a business. However, ASC 805 first requires a company to evaluate whether substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If the substantially all threshold is met, the set is not a business. When an acquirer buys a DAT, reaching a conclusion about whether it has bought a business (as defined in ASC 805) requires the application of professional judgment. See BDO’s Blueprint, Business Combinations Under ASC 805, for more guidance.
- Segment Reporting — ASC 280: Under ASC 280, an operating segment is a component that engages in business activities from which it earns revenues and incurs expenses, whose operating results are regularly reviewed by the Chief Operating Decision Maker (CODM), and for which discrete financial information is available. While ASC 280 does not explicitly refer to the definition of a business in ASC 805, a company may find it helpful to consider the guidance in ASC 805 when analyzing whether a component engages in business activities. How a CODM actually runs the company — how performance is measured, resources are allocated, and results are reviewed — is a critical part of the analysis. When management allocates capital, evaluates performance metrics, reviews discrete financial information, and makes strategic decisions relating to Bitcoin-related business activities, those activities may meet the criteria to be an operating segment under ASC 280. See BDO’s Blueprint, Segment Reporting Under ASC 280, for more guidance on segment reporting.
What Comes Next
Bitcoin companies such as DATs are typically developing broad strategies involving capital formation, treasury management, financing structures, lending arrangements, collateralization programs, and other activities that go beyond waiting for asset appreciation. As these models continue to develop, the distinction between merely holding Bitcoin and actively operating a Bitcoin-related business becomes increasingly significant.
Transformative business models often look unconventional in their early years. Large e-commerce companies may absorb years of losses while building out logistics and subscription models. The “freemium” model now used by many software companies was once viewed skeptically because it offered core products at no cost to users. Similarly, many social media companies operated at losses during their formative years before advertising evolved into a significant revenue source that supported their growth and profitability. In each case, the operating model was being figured out in real time and the market ultimately caught up. Emerging business models may be difficult to categorize in their early years.
Bitcoin-centered models are still developing. What makes this moment particularly compelling is that DATs are only beginning to develop additional financial structures around their holdings. Examples of instruments built on a digital-asset foundation include preferred stock offerings, lending arrangements, and the use of Bitcoin as collateral. Additional fintech products and financial securities that further monetize these reserves may emerge. Such developments could influence how market participants evaluate these companies over time and how they distinguish companies that merely hold Bitcoin from companies that use Bitcoin as part of an active operating model.
BDO’s Blockchain & Digital Assets and Accounting & Reporting Advisory teams help management teams document their accounting positions and navigate the complexities of applying U.S. GAAP.