Next Technology's 80% Payout Policy: Can This Bitcoin-Driven Dividend Strategy Deliver Sustainable Value?

Next Technology Holding Inc. (NASDAQ: NXTT) has made a bold move to institutionalize shareholder returns by mandating an 80% payout of annual profits, effective September 8, 2025. This policy, approved unanimously by its Wyoming-based board, is underpinned by a dramatic Q2 2025 net income of $312 million—largely driven by Bitcoin's 15.3% price surge in the first half of the year. The company's Bitcoin holdings, which grew from 833 to 5,833 coins (a 600% increase), now represent 99.8% of its total assets. While the strategy promises outsized returns, it raises critical questions about sustainability in a volatile market.

The Dual-Engine Model: AI and Bitcoin

Next Technology's business model combines AI-enabled software development with strategic Bitcoin accumulation. The company's operational expenses for the six-month period were a modest $705,820, underscoring that its core software services contribute minimally to earnings. Instead, its financial performance hinges on Bitcoin's price action. The $449 million fair value gain from Bitcoin's appreciation in H1 2025 directly fueled the $312 million net income, enabling the 80% payout policy.

This approach mirrors the trajectory of Bitcoin-focused ETFs like BITO, which saw a 352.2% dividend growth rate in 2025. However, unlike traditional equities, Bitcoin's volatility introduces unique risks. For instance, a 20% correction in Bitcoin's price could erase nearly $250 million in unrealized gains, threatening the dividend's sustainability.

Risks of Over-Reliance on a Single Asset

Next Technology's balance sheet is heavily skewed toward Bitcoin, with combined cash and digital assets reaching $632.7 million as of June 30, 2025. While this concentration amplifies returns in bullish cycles, it exposes the company to severe downside risks. Historical Bitcoin cycles, such as the 70–80% drawdowns in 2018 and 2022, highlight the asset's unpredictability.

Moreover, the company's Bitcoin acquisition strategy relies on equity dilution. It issued 135.17 million shares and warrants for 294.12 million additional shares in H1 2025, raising $12.1 million in cash. This dilution could erode shareholder value if Bitcoin's price stagnates or declines, as the cost of capital becomes prohibitively high.

The deferred tax liability has also ballooned to $91.2 million, reflecting potential future obligations on unrealized gains. If Bitcoin's price drops, these gains could reverse, creating a double whammy of capital losses and tax burdens.

Governance Safeguards and Shareholder Approval

The dividend policy includes quarterly assessments of liquidity, cash flow, and growth needs, ensuring flexibility to adjust payouts. However, the requirement for shareholder approval at the Annual General Meeting adds a layer of democratic oversight. This structure balances institutionalized returns with operational prudence, though it may delay responses to market shifts.

Balancing Growth and Returns: A Strategic Dilemma

The 80% payout policy aligns with shareholder interests by converting exceptional performance into predictable returns. CEO Weihong Liu emphasizes that the strategy “retains flexibility to fund growth,” but the company's minimal operating cash flow ($705,820 in six months) suggests limited reinvestment capacity. This raises concerns about long-term innovation in its AI software division, which could lag behind competitors.

Historical Bitcoin dividend strategies, such as those tied to BITO, show that high yields often come at the cost of volatility. For example, BITO's trailing twelve-month dividend yield of 54.6% in 2025 was accompanied by 14 dividend reductions in three years. Investors in NXTT must weigh these precedents against the company's governance safeguards.

Investment Implications

Next Technology's strategy appeals to risk-tolerant investors seeking exposure to Bitcoin's growth while benefiting from a structured dividend framework. However, the following factors warrant caution:
1. Price Volatility: Bitcoin's 15.3% gain in H1 2025 could reverse rapidly, threatening dividend sustainability.
2. Dilution Risks: Continued equity issuance may dilute earnings per share if Bitcoin's price stagnates.
3. Tax Exposure: Unrealized gains could trigger future liabilities, especially in a regulatory environment that may shift.

For a diversified portfolio, NXTT could complement traditional equities and bonds, but it should not be a core holding. Investors should monitor Bitcoin's price action and the company's quarterly liquidity assessments.

Conclusion: A High-Reward, High-Risk Proposition

Next Technology's 80% payout policy is a testament to the transformative power of Bitcoin in modern finance. By leveraging its dual-engine model, the company has created a compelling value proposition for shareholders. However, the strategy's long-term viability depends on Bitcoin's ability to maintain its upward trajectory and the company's capacity to navigate regulatory and market risks.

For investors, the key takeaway is to balance optimism with caution. While NXTT offers a unique blend of high-growth potential and shareholder returns, it is best suited for those with a high-risk tolerance and a deep understanding of cryptocurrency's inherent volatility. As the market evolves, the true test of this strategy will lie in its ability to adapt to a rapidly changing financial landscape.