MicroStrategy Stock Premium Defended by Blockstream CEO Adam Back

Coin WorldSunday, Jun 22, 2025 2:21 am ET
1min read

Adam Back, the CEO of Blockstream, has defended the premium associated with MicroStrategy's stock, asserting that it is not unreasonable given the company's strategy of rapidly increasing its Bitcoin holdings. Speaking at BTC Prague, Back highlighted that MicroStrategy has historically doubled its Bitcoin per share every 16 to 18 months, which justifies the stock's premium. He explained that if this trend continues, investors would effectively be derisked after about a year and a half, as the stock's value would align with its market net asset value (mNAV).

Back's comments come as MicroStrategy's stock has traded at a 2x multiple "on and off," reflecting investor confidence in the company's Bitcoin strategy. The firm's current net asset value premium is approximately 1.7x based on basic shares and around 1.9x when calculated on a diluted share basis. MicroStrategy employs leverage through financial instruments such as at-the-market equity offerings and convertible senior notes to boost its Bitcoin holdings, which currently stand at 592,100 Bitcoin.

Back emphasized the importance of considering whether the premium on Bitcoin treasury companies is reasonable. He suggested that investors should evaluate how many months it takes to overcome the premium, indicating that a higher mNAV comes with increased risk but also potentially higher yields. He noted that significant fluctuations in mNAV can be a "nervous experience" for investors, using Japanese investment firm Metaplanet as an example. Metaplanet has seen its mNAV fluctuate between 10 and 5, but has managed to recover each time.

Back's endorsement of MicroStrategy's strategy reflects the growing institutional acceptance of Bitcoin as a store of value and a hedge against inflation. The company's approach of continuously increasing its Bitcoin reserves aligns with the broader trend of institutional adoption of cryptocurrencies. MicroStrategy's decision to hold Bitcoin as a primary reserve asset has sparked discussions about the role of cryptocurrencies in traditional financial portfolios and serves as a case study for other companies considering similar strategies.

However, investing in MicroStrategy's stock also comes with risks, including the volatility of the cryptocurrency market and regulatory uncertainties. Back's perspective suggests that the premium on MicroStrategy's stock is justified by the company's aggressive accumulation of Bitcoin and its innovative approach to corporate treasury management. While some may view the premium as unreasonable, Back's analysis indicates that it is a reflection of the company's long-term strategy and the potential benefits of investing in Bitcoin.