Key Takeaways
- Since October, many digital asset treasury (DAT) firms have seen their profits turn negative.
- DATs have responded to recent bearishness in different ways.
- Some continue to stack crypto while others have opted to sell.
With the global crypto market cap down around 27% from its peak on Oct. 10, dozens of digital asset treasury (DAT) firms that stacked coins earlier in the year are now sitting on unrealized losses.
Yet many continue to raise money to fund more purchases.
As they knuckle down for what could be a prolonged market downturn, DATs are turning to a diverse array of strategies to protect their balance sheet and remain attractive to investors.
The OG Digital Treasury Strategy
Credit for pioneering the DAT concept goes to Michael Saylor, who transformed a small software company into a Bitcoin powerhouse with assets worth around $60 billion as of Nov. 27.
Since 2020, Saylor has used capital-structure engineering to hedge against short-term volatility while maximizing long-term upside.
His company, Strategy, raises money from investors in the form of unsecured debt or by issuing new MSTR stock.
Since lenders never have a claim on the underlying Bitcoin, the firm doesn’t face the risk of liquidation, and Saylor has made a point of never selling BTC.
Because it entered early and purchased much of its BTC at lower prices, unlike many of its younger DAT peers, Strategy’s Bitcoin investments remain in profit even after the recent downturn.
In fact, Saylor insists the company could survive a 90% market crash and would be able to fund dividend payments for another 71 years at current prices.
DAT’s Post-MicroStrategy
Since 2020, Strategy (previously MicroStrategy) has weathered multiple market crashes, and Saylor’s model has gone on to inspire a generation of DATs that have expanded the concept to other cryptocurrencies.
In an interview with CCN, Republic Technologies CEO Daniel Liu said the Ethereum treasury firm took inspiration from both Strategy and Metaplanet, a Japanese hotel operator-turned Bitcoin DAT.
“We looked at how Saylor survived through 2020 until now” to develop a strategy “that would keep us hedged and not overexposed at the top,” he explained.
However, many companies that entered the space in 2025 have discovered that they may well have bought at the top of the cycle.
With ETH trading at around $3,000, even sector leaders Bitmine and SharpLink are in the red.
Against this backdrop, DAT stocks have plummeted amid rising fears of a market bubble.
This has prompted firms including ETHZilla and FG Nexus to sell crypto in order to fund share buybacks and bolster their stock value.
Hedging Against a Downturn
Liu coined the term “synthetic mining” to describe Republic Technologies’s ETH purchases.
To minimize downside risk, the company determines a below-market price it wants to pay for ETH and then sells put options with a slightly higher strike price.
If ETH never drops to the strike price, Republic Technologies keeps the premium and never buys. If it does, it earns a premium on the put and buys in at the lower price.
“By perpetually doing this, we either get the price we want, or we just continuously generate revenue,” Liu observed. Moreover, he claimed that over three months of synthetic mining, the strategy yielded around 103% returns.
Beyond acquisition strategies, the other component to DAT success is funding, where Liu also draws inspiration from his forebearers. “As Michael Saylor says, when debt is cheap, raise debt. When equity is cheap, raise equity,” he recalled.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
