The dilution trap where Bitcoin holdings rise while shareholder value stalls
Buying shares in a Bitcoin treasury firm provides possession in a enterprise that holds Bitcoin, and administration decides the right way to pay for the cash and when to purchase or promote them.
The firm additionally has payments to pay and will owe cash to lenders, so the shares’ value relies on these choices and Bitcoin’s worth.
France’s Capital B is a Bitcoin treasury firm that makes that relationship straightforward to see. Between Aug. 17 and Sept. 7, its treasury Bitcoin holdings elevated from 3,145 BTC to three,521 BTC, roughly 12%.
However, Bitcoin per share barely moved underneath the corporate’s calculation, which incorporates some shares that might be created sooner or later. More Bitcoin got here into the enterprise alongside extra claims to possession.
That consequence explains why the strategy of paying for Bitcoin belongs on the heart of any evaluation of a treasury inventory.
Selling new shares raises money, however present shareholders then personal a smaller proportion of the corporate. Borrowing preserves their proportion for the second while including a compensation obligation. Either can work properly on favorable phrases, however each have an effect on the funding’s value.
Capital B is listed on Euronext Growth Paris and adopted its Bitcoin technique in November 2024. Previously often called The Blockchain Group, it additionally retained technology-services companies. Its operating-company portfolio consists of iORGA, which builds internet purposes, and Trimane, which provides business-intelligence and AI consulting.
Shareholders personal a stake in the entire group, together with the subsidiaries and their bills.
Like Strategy, Capital B goals to make use of entry to funding capital to build up Bitcoin. Its French accounting guidelines and euro funding imply it should pursue that aim in a really totally different monetary setting than its American colleagues. The comparability helps clarify what buyers achieve by placing a administration crew between themselves and the cash, and what they pay for that association.
Buying Bitcoin is the straightforward half
Companies can use money earned by their companies to purchase Bitcoin, or increase cash from buyers and lenders. Each strategy provides the financiers a special declare on the corporate.
Using surplus working money would not instantly add shares or debt, though it makes use of cash that might have served one other objective. Selling shares brings in recent capital and spreads possession throughout extra shares. Borrowing creates an obligation that needs to be met even when the funding disappoints.
More shares aren’t mechanically unhealthy for present shareholders. The situation worth determines how a lot new buying energy every share brings into the corporate.
Consider a hypothetical enterprise with 100 BTC and 100 shares, with Bitcoin fastened at €100,000. It points one other ten shares and makes use of each euro raised to purchase cash. This simplified instance assumes no charges, taxes, working bills, or debt.
| New share situation | Cash raised | Bitcoin bought | Total BTC | Total shares | BTC per share |
|---|---|---|---|---|---|
| Ten shares at €150,000 every | €1.5 million | 15 | 115 | 110 | 1.0455 |
| Ten shares at €80,000 every | €800,000 | 8 | 108 | 110 | 0.9818 |
Both begin with one BTC per share. Prices and portions are hypothetical and don’t describe Capital B securities.
In the primary case, an present shareholder owns a smaller proportion of an organization containing sufficient extra Bitcoin to extend the quantity per share. In the second, the brand new money would not purchase sufficient cash to take care of the unique ratio.
The first transaction relies on buyers paying extra per new share than the Bitcoin value of an present one. They would possibly settle for that premium as a result of they anticipate administration to repeat worthwhile financings.
That expectation may help the method proceed, however as soon as consumers cease paying the premium, issuing shares buys much less Bitcoin for every extra share created.
Capital B additionally raises money through packages combining atypical shares and warrants. Warrants give holders the suitable to purchase future shares at specified train costs. Capital B’s Aug.28 financing terms connected 4 warrants to every share, with totally different train costs and five-year maturities.
Investors pay for the preliminary package deal and may later pay once more to train the warrants. That second fee may finance extra Bitcoin purchases, but it surely is not money already within the firm’s account. If train is unattractive, the holder might by no means provide that more money.
Exercised warrants usher in money and create shares on the similar time. Any estimate of their impact on present house owners wants to incorporate each, utilizing the train worth to calculate how a lot cash the corporate would obtain.
Convertible debt is one other strategy to finance Bitcoin purchases. Lenders obtain compensation claims with a contractual path into shares, and the corporate owes the debt underneath its phrases till conversion.
Capital B has used Bitcoin-denominated convertible financing, described in its annual outcomes presentation, alongside its different funding preparations.
Bitcoin-linked obligations behave in another way from fixed-euro debt. When compensation follows Bitcoin’s value, a extra invaluable reserve can include a costlier obligation in euros. The conversion and compensation provisions decide that relationship.
Zero-coupon financing avoids periodic curiosity funds, while lenders can obtain compensation by means of different phrases, together with their conversion rights.
Strategy’s US enterprise makes use of widespread fairness, convertible debt, and most well-liked inventory. Preferred shares typically rank above widespread shares for specified claims and may carry dividend obligations, relying on their phrases.
Its July results additionally describe Bitcoin gross sales to fund a part of its most well-liked dividends. Treasury corporations can subsequently differ in how they use Bitcoin and the way they finance it.
More cash divided amongst extra shares
The most seen quantity in a treasury announcement is often the coin steadiness. To perceive an present shareholder’s place, it’s a must to pair that quantity with a share rely.
Capital B’s Sept. 7 filing supplies the comparability beneath. Its diluted share count consists of present shares and sure shares that might be issued, permitting the corporate to estimate how a lot Bitcoin every would symbolize. Satoshis are the smallest Bitcoin items, with 100 million in a single BTC.
| Company-reported measure | Aug. 17, 2026 | Sept. 7, 2026 |
|---|---|---|
| Treasury-strategy Bitcoin | 3,145 BTC | 3,521 BTC |
| Issued widespread shares | 330,306,740 | 382,506,040 |
| Shares counted within the firm’s diluted measure | 427,074,421 | 477,977,121 |
| Satoshis per diluted share | 736.4 | 736.6 |
All share figures use the pre-consolidation foundation within the Sept. 7 submitting. The reserve excludes individually designated operational Bitcoin. The diluted rely is company-defined.
Both the Bitcoin reserve and the diluted share rely expanded by roughly 12%, leaving the ratio virtually flat. This ratio compares the holdings to an outlined variety of shares. Shareholders don’t have any normal proper to change every share for that quantity of Bitcoin, and the calculation would not deduct the corporate’s money owed.
The subsequent day introduced an administrative occasion that may distort comparisons with these figures. Capital B’s ten-for-one reverse stock split took impact Sept. 8. Ten previous shares turned one new share. The consolidation reduces the share rely and mechanically will increase the quantity attributable to every ensuing share with out multiplying the corporate’s property.
On that foundation, 736.6 satoshis per previous share corresponds mechanically to 7,366 per new share, changing the historic determine into the brand new items. Charts should use a constant share foundation or threat displaying spectacular efficiency produced solely by the consolidation.
The firm’s “BTC Yield” measures the share motion in Bitcoin per diluted share over a interval. Despite its title, it pays shareholders no money and measures a special end result from their funding return, as Capital B explains in its disclosure.
Shareholders’ returns rely on the costs at which they purchase and promote, while company obligations have an effect on their declare on the property.
“Fully diluted” sounds as if it consists of each doable future share, however a company-defined efficiency measure can use a particular set of assumptions. Capital B’s rely incorporates issued shares, assumed convertible-bond shares, worker awards, and an extra reserve for potential shares.
To assess the excellent warrants, we want a separate train state of affairs, together with the proceeds mentioned earlier. How a lot Bitcoin these proceeds may purchase relies on its worth when the money turns into obtainable.
Conversion provides shares to the calculation, but it surely would not make conversion inevitable. If lenders as an alternative retain compensation claims, widespread shareholders should account for these claims. Subtracting debt and assuming the identical debt converts on the similar time can even double-count the burden.
Gross Bitcoin-per-share figures describe the reserve relative to a share rely. Net asset value subtracts obligations from property, and the inventory market can worth shares above or beneath that consequence.
Comparing these measures requires constant assumptions about debt conversion and the cash any new shares would usher in.
What shopping for by means of a French firm provides
Europe makes this mannequin totally different in ways in which attain past the change on which the shares commerce, beginning with the forex.
Capital B raises cash and reviews most figures in euros. Bitcoin itself is not a greenback declare, though the Bitcoin dollar price dominates monetary protection. The euro price of shopping for it displays each that generally quoted worth and the euro-dollar change charge.
Suppose Bitcoin stays at $100,000. At $1.25 to the euro, it prices €80,000. At $1 to the euro, it prices €100,000. Those are hypothetical change charges, however they clarify why an unchanged greenback Bitcoin worth would not indicate an unchanged euro balance-sheet value.
Euro working prices and Bitcoin-linked financing obligations add totally different exposures to the identical firm.
The second distinction is the market by means of which it raises capital. Euronext Growth is a multilateral trading facility aimed toward smaller corporations, with necessities distinct from Euronext’s primary regulated markets.
Capital B operates inside a French company framework and the foundations governing that venue and its securities.
Those guidelines govern how administration can situation shares and what buyers have to be instructed. Subscription rights may give present shareholders an opportunity to purchase new shares earlier than exterior buyers, serving to them preserve their possession proportion.
Whether these rights apply or have been waived relies on the transaction. The worth at which Capital B can increase cash additionally relies on buyers prepared to purchase its securities.
Accounting is the third distinction, and it relies on the corporate and its location.
Capital B’s 2025 consolidated accounts use French accounting guidelines. Under its said Bitcoin coverage, unrealized positive factors are recorded by means of balance-sheet accounts, while unrealized losses can require a provision charged in opposition to earnings.
That means will increase and reduces in Bitcoin’s value can have an effect on reported outcomes in another way, even when no cash are bought.
US guidelines for qualifying crypto property require fair-value measurement with valuation actions acknowledged in internet earnings, so the FASB standard produces totally different earnings.
Other European corporations might use IFRS, whose crypto accounting framework additionally relies on the aim of the holdings. The relevant accounting guidelines should subsequently be checked firm by firm.
| Dimension | Capital B | Strategy |
|---|---|---|
| Main common-share venue | Euronext Growth Paris | Nasdaq |
| Reporting forex | Euro | US greenback |
| Financing featured within the cited disclosures | Share gross sales with warrants and Bitcoin-denominated convertibles | Common fairness, convertible debt, and most well-liked securities |
| Accounting foundation related right here | French guidelines in its 2025 consolidated accounts | US GAAP fair-value therapy of qualifying crypto property |
| What widespread shareholders should consider | Financing phrases, working prices, and claims in opposition to property | Financing phrases, working prices, and claims in opposition to property |
Company-specific comparability utilizing the cited disclosures. Neither column represents each treasury firm in its area; devices and insurance policies can evolve.
Different accounting could make two companies’ reported earnings tough to check even when their property expertise the identical market transfer. Those valuation entries describe actions in asset value, while the money obtainable to satisfy payments relies on the corporate’s receipts, spending, and financing.
Capital B’s 2025 results put that distinction into context. It reported a €62.2 million internet loss, largely attributable to a €53.9 million Bitcoin impairment, alongside constructive adjusted EBITDA of about €1.2 million at its established working entities. Group adjusted EBITDA was unfavorable, and the discharge recognized about €4.1 million of treasury-business prices.
Those numbers describe totally different components of the enterprise and assist describe working efficiency, while money that can be purchased cash relies on precise receipts and funds.
Custody, employees, and company financing require assets even when administration intends to retain its reserves. Operating subsidiaries may help fund these bills with out making them disappear.
Finally, European buyers have already got alternate options to company treasury publicity. WisdomTree’s Bitcoin product document describes a bodily backed exchange-traded debt safety. Its authorized construction differs from each direct Bitcoin and shares in Capital B, but it surely demonstrates that purchasing a treasury firm is not Europe’s solely listed path to the asset.
Investors additionally should separate the enterprise’s advantage from its share worth. Paying a big premium for succesful administration means paying immediately for a few of its hoped-for future success. Discounts might compensate consumers for company bills or doubts about entry to recent capital.
Either worth must be judged in opposition to the obligations and prospects behind it.
Favorable issuance can enhance Bitcoin publicity per share, giving shareholders one thing direct holdings can’t ship on their very own. That profit has to earn its place alongside company bills and financing threat.
Investors preferring a passive product settle for a extra restricted mandate in change for avoiding these administration choices.
Capital B’s enchantment relies on administration elevating cash on phrases that depart present shareholders higher off as soon as the corporate’s prices and obligations are accounted for. Its bigger Bitcoin reserve is one a part of that evaluation.
The share rely explains how extensively possession is split, and the financing contracts clarify who have to be paid. Buying the inventory means trusting administration to make these items work collectively at a worth value paying.
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