What is BTC Yield per share in corporate treasury modeling?

BTC Yield is the percentage change over time in the ratio of the company's total Bitcoin holdings to its fully diluted shares outstanding: BTC Yield = (BTC_t / DilutedShares_t) / (BTC_{t-1} / DilutedShares_{t-1}) - 1. When a company issues equity or convertible debt at a premium to NAV to acquire Bitcoin, it can increase the net Bitcoin backing per share, resulting in positive accretion.

How does convertible debt provide downside protection for a Bitcoin treasury company?

Convertible senior notes carry low fixed cash coupons (often 0.625% to 2.0%) and have long maturities (5 to 7 years) with zero margin call liquidation triggers. Unlike collateralized bank debt, bondholders cannot force liquidations during market drawdowns; the company only needs to service the minimal cash coupon from core operating business cash flows.

Model #40 • Desk 7: Digital Assets & Crypto Derivatives

Bitcoin Corporate Treasury & Convertible Note Accretion Underwriter

An institutional corporate finance underwriter simulating the MicroStrategy (MSTR) Bitcoin treasury reserve strategy. Model low-coupon convertible senior note issuances, ATM equity dilution funding, BTC Yield per diluted share accretion, enterprise value to Bitcoin NAV (mNAV) multiples, and debt service survival during 80% bear market drawdowns.

Capital Allocation Models:

Corporate Baseline Parameters CAPITAL STRUCTURE

Company Stock Price ($ / Share) $140.00

Current common share price before financing tranche.

Total Diluted Shares Outstanding (M) 195.0M shares

Existing fully diluted share count before conversion.

Core Operating Business EBITDA ($M/yr) $120.0M / year

Cash flow from legacy software or operating enterprise.

Bitcoin Treasury & Financing

Spot Bitcoin Benchmark ($) $65,000

Benchmark institutional price for spot BTC acquisitions.

Existing Treasury Bitcoin Held (BTC) 225,000 BTC

Current Bitcoin assets residing in institutional cold custody.

New Financing Tranche Size ($M) $1,000M ($1.0B)

Gross proceeds raised to execute market spot purchases.

Convertible Senior Note Coupon (%) 0.875%

Annual fixed cash coupon rate paid to bondholders.

Conversion Strike Premium (%) 40.0%

Premium above stock price at which notes convert into equity.

Accretion & Balance Sheet HUD ACCRETION RUNTIME

BTC Yield (Per Share Accretion) +4.12% +0.048 BTC / 1k Shares

EV to Bitcoin NAV (mNAV) 1.82x Trading at 82% NAV Premium

Operating Interest Coverage (ICR) 13.7x $8.75M Annual Coupon Drag

New Bitcoin Acquired +15,385 BTC 240,385 Total BTC Stack

Pre vs. Post Financing Balance Sheet & Shareholder Telemetry

Financial Line Item	Pre-Financing Base	Post-Financing Pro Forma	Delta / Accretion
Total Bitcoin Stack Held (BTC)	225,000 BTC	240,385 BTC	+15,385 BTC (+6.8%)
Market Value of Bitcoin Reserves	$14,625M	$15,625M	+$1,000M
Fully Diluted Common Shares (M)	195.00M	200.10M	+5.10M Conversion Shares (+2.6%)
Bitcoin Held Per 1,000 Diluted Shares	1.154 BTC	1.201 BTC	+4.12% BTC Accretion
Convertible Senior Note Principal Outstanding	$0.0M	$1,000.0M	5Y Maturity (No Margin Call)
Effective Note Conversion Strike Price	—	$196.00	+40.0% Premium to Stock
Annual Debt Service Cash Expense	$0.0M	-$8.75M / yr	Funded via Core EBITDA
Enterprise Value to Bitcoin NAV (mNAV Multiple)	1.87x	1.82x	ACCRETIVE ARBITRAGE

BTC Price Shock vs. Conversion Premium (BTC Yield & mNAV Multiple)

Quantitative Formulation: Convertible Arbitrage & BTC Yield Dynamics

The core innovation of the corporate Bitcoin treasury model is utilizing asymmetric capital markets access: institutional investors pay an equity volatility premium (allowing debt issuance at near-zero coupons with a 40%+ conversion premium), while the company purchases spot Bitcoin at par.

$$\text{BTC Yield} = \frac{\text{BTC}_{t} / S_{\text{diluted}, t}}{\text{BTC}_{t-1} / S_{\text{diluted}, t-1}} - 1 \quad \Longleftrightarrow \quad \Delta_{\text{BTC}} > \Delta_{\text{Shares}}$$

Because the convertible debt strike price is set at a 40% premium to current equity ($P_{\text{conv}} = P_{\text{stock}} \cdot 1.40$), fewer shares are created upon conversion than if straight equity had been sold. So long as the percentage increase in Bitcoin exceeds the percentage increase in fully diluted shares, the transaction is non-dilutive and creates accretive Bitcoin per share.

$$\text{mNAV Multiple} = \frac{\text{Market Cap} + \text{Total Debt} - \text{Cash}}{\text{BTC Holdings} \cdot P_{\text{BTC}}}$$

When a company trades at an mNAV multiple $> 1.0\text{x}$, it possesses a reflexive "infinite money glitch": issuing shares or convertibles at $1.8\text{x}$ NAV to buy Bitcoin at $1.0\text{x}$ NAV is mathematically guaranteed to increase Bitcoin backing per share.

$$\text{Interest Coverage Ratio (ICR)} = \frac{\text{Operating Core EBITDA}}{\text{Principal} \cdot c_{\text{coupon}}}$$

Crucially, senior unsecured convertible notes carry no maintenance margin covenants. Even if Bitcoin plunges 80% during a crypto winter, the company cannot be liquidated so long as core enterprise operating EBITDA covers the low annual cash coupon.