In recent years, a lot of public companies have started adding Bitcoin to their balance sheets, with hopes to benefit from its rapid price growth and its reputation as “digital gold.”
The trend started back in 2020 when the U.S based firm, Strategy formerly MicroStrategy converted a large part of its cash reserves into Bitcoin, arguing that the crypto was a better store of value than fiat money. Since then, more than 138 public companies around the world have followed suit, according to bitcointreasuries.net.
By June 2025, the companies collectively hold a combined total of more than 834,000 BTC, about 3.5%–4% in total supply. This move, while seen as a move toward financial innovation. But while the upside has been real for some, experts are now warning of a dangerous side effect: capital erosion.
VanEck Warns of Capital Erosion in Bitcoin-Heavy Treasury Strategies
VanEck, a global investment firm, has issued a warning stating that companies that rely too heavily on Bitcoin for their treasury strategies come with serious risks called the capital erosion. This happens when a company’s value per share decreases over time, even if it holds a lot of Bitcoin.
This can happen in two ways. First, Bitcoin is extremely volatile. If a company buys in at a high price and the value drops, even temporarily, it can damage the company’s overall asset base. Second, many of these companies are funding their Bitcoin purchases by issuing new shares or taking on debt. When a firm’s stock is trading at or near its net asset value (NAV), issuing more shares can dilute the ownership of existing shareholders. This means each share becomes worth less, even if the total amount of Bitcoin held increases.
VanEck’s head of digital assets, Matthew Sigel, highlighted the risk of capital erosion in a post on X. He cautioned boards and shareholders, advising them to “act with discipline, while they still have the benefit of optionality.”, especially when new shares are issued too close to NAV.
Real World Examples
Real-world examples are already showing signs of trouble. Metaplanet, once a hotel company and now a crypto treasury firm, has raised over $200 million through zero-coupon bonds to buy Bitcoin. If the market turns or Bitcoin prices fall, the company could be left overleveraged, with investors unwilling to support further funding rounds.
Meanwhile, Semler Scientific has already experienced the downside. The U.S. medical tech firm began buying Bitcoin in 2024 and aimed to become one of the largest holders, with a target of 10,000 BTC.
By mid-2025, however, its stock had dropped more than 41%, despite Bitcoin’s price rising. At one point, the company’s entire market value was less than the value of its Bitcoin holdings, signaling a complete loss of market confidence.
This shows that even if Bitcoin performs well, a company’s stock can suffer if investors feel it’s overexposed or drifting too far from its core business. It’s also a warning to others: holding Bitcoin alone doesn’t guarantee shareholder value.
To help prevent these risks, VanEck has offered a set of clear guidelines. Companies should pause stock issuance if their share price drops below 95% of NAV for more than 10 days. Instead of buying more Bitcoin during price rallies, they should consider buying back their own shares to support the stock price and reduce dilution.
Executive bonuses should be tied to per-share growth, not just the total number of Bitcoins held. And if a company’s stock continues to trade at a discount to NAV, it should consider major changes, such as restructuring, spinning off assets, or revising its Bitcoin-first strategy.
The key, VanEck argues, is to use Bitcoin as a tool, not as a core identity. It should serve a clear financial purpose and support long-term value, not replace sound business fundamentals.
Also Read: Mastercard, Chainlink Team Up to Let 3B Cardholders Buy Crypto
