Accretive Dilution Explained: When “Printing Shares” Grows Bitcoin Per Share
How Bitcoin treasury companies flip financial orthodoxy and turn dilution into compounding.
Issuing new shares is usually bad for shareholders—it dilutes their ownership. Bitcoin treasury companies (BTCTCs) turn that idea upside down.
Think of a pie: normally, more slices make each one thinner. A BTCTC only adds slices when it can thicken the entire pie—so even with more slices, each one represents more of what matters.
The idea is accretive dilution.
How? BTCTCs’ key performance indicator isn’t earnings per share, or cash flow per share—it’s bitcoin per share (bps). Every decision is judged by whether it increases the amount of bitcoin each share represents. This focus creates a unique dynamic, where in certain circumstances issuing new shares can suppress the share price while growing bps.
The reason lies in the fact that a BTCTC has two moving parts: the fiat share price, set by the stock market, and the price of bitcoin. These two move independently, and that creates opportunities for divergence between how much bitcoin a share is worth on the balance sheet and how much bitcoin the market is implicitly willing to pay for a share. When that divergence is wide enough, the company can issue stock and buy bitcoin in a way that leaves every share backed by more BTC than before.
Let’s explore.
Four key metrics to track
To understand accretive dilution, we must first define 4 metrics:
Fiat share price (M): the market price per share in dollars (or local currency). This number is forward-looking, reflecting not just current holdings, but expectations about the value of future accumulation.
Share price in BTC terms: M ÷ PBTC. By dividing the dollar share price by the price of bitcoin, you can see how many bitcoins the market is implicitly valuing each share at.
Bitcoin per share (bps): B ÷ S. This is the amount of bitcoin that each share represents on the balance sheet (net of liabilities).
mNAV per share: (B × PBTC − L) ÷ S. This is the bitcoin-backed net asset value per share, once liabilities are accounted for, with L = net liabilities in dollars.
You can think of mNAV as what each share would be worth if the company were reduced to just its bitcoin minus its debts.
Because both the fiat share price and the bitcoin price are constantly moving independently, these metrics will often diverge. And it is this divergence that creates the opportunity for accretive issuance.
The accretion test
The test for whether new share issuance is accretive dilution or destructive dilutive is straightforward:
If (M / PBTC) > (B / S), new issuance is accretive to bps—each new share sold brings in more bitcoin than the average share already represents.
If (M / PBTC) < (B / S), new issuance is dilutive to bps—each new share brings in less bitcoin than the average share, lowering bps.
In other words, issuing shares is accretive only when the market is willing to pay, in bitcoin terms, more than the company’s existing per-share bitcoin backing.
In pie terms, only cut thinner slices if you can make the pie bigger (or thicker) by a greater amount, leaving each slice with more pie overall.
Working through the scenarios
Assume a company holds 100 BTC with 100,000 shares outstanding, so bps = 0.001 BTC/share. With bitcoin priced at $100,000, the company’s mNAV = $100 per share (assuming no liabilities). Now let’s see what happens if the company issues 10,000 new shares (a 10% increase) and uses all of the proceeds to buy bitcoin.
Scenario A: sold below mNAV (destructive dilution)
Suppose the market values the stock at $90 per share. In bitcoin terms, that’s $90 ÷ $100,000 = 0.00090 BTC/share. Because this is below the current bps of 0.001, the issuance will be dilutive. Here’s how:
Raise: 10,000 × $90 = $900,000, which buys 9.00 BTC.
After issuance: total holdings = 109.00 BTC, total shares = 110,000, so bps = 109 ÷ 110,000 = 0.0009909 BTC/share
mNAV per share: 0.0009909 × $100,000 = $99.09.
Result: The balance sheet holds more bitcoin, but each share is now backed by less—bps and mNAV per share both decline—destructive dilution.
Scenario B: sold above mNAV (accretive dilution)
Suppose the market values the stock at $120 per share. In bitcoin terms, that’s $120 ÷ $100,000 = 0.00120 BTC/share. Because this is above the current bps of 0.001, the issuance will be accretive. Here’s how
Raise: 10,000 × $120 = $1,200,000, which buys 12.00 BTC.
After issuance: total holdings = 112.00 BTC, total shares = 110,000, so bps = 112 ÷ 110,000 = 0.0010182 BTC/share.
mNAV per share: 0.0010182 × $100,000 = $101.82.
Result: The balance sheet holds more bitcoin AND each share is now backed by more bitcoin. Bps and mNAV per share both rise—accretive dilution.
Thinner slices, but more pie from capturable divergence
It isn’t about how many slices you have relative to the total—it’s about how much pie your serving is.
BTCTCs grow the pie by harvesting a persistent, capturable divergence between a forward-looking fiat share price and a balance sheet denominated in bitcoin. That divergence shows up as a premium to mNAV, and several forces justify its persistence:
Inflationary fiat vs. absolute scarcity: Shares are quoted in an inflationary currency, while every new coin added is 1/21,000,000 of a perfectly scarce asset—permanent capital. Over time, this scarcity vs. inflation dynamic has supported a higher bitcoin price (historically compounding at 40%+ CAGR over multi-year spans) and higher valuations for proven accumulators.
Forward-looking pricing vs. current holdings: Stocks are priced in fiat based on future expectations, not just today’s assets. If a BTCTC has a clear policy and track record of adding more BTC each quarter, its equity should naturally trade at a premium to current appreciating holdings.
Demand for real yield with hard collateral: Large capital pools are starved for real returns secured by strong balance sheets. An under-levered BTCTC with unencumbered BTC is a secure borrower, since lenders and preferred holders have recourse to liquid bitcoin that can be sold, even in bankruptcy. This attracts debt, converts, and preferreds—capital that reinforces the premium by funding more BTC accumulation.
Execution turns premium into coins today: By issuing stock only at a BTC-term premium, staggering maturities, blending dividend obligations, and managing volatility risk, management can take in fiat now, convert it into BTC, and service obligations later. As long as bitcoin’s long-run performance continues to outpace financing costs, the market has reason to sustain the premium.
Leverage on bitcoin itself: If investors believe the premium to mNAV is persistent and justified, a BTCTC becomes a leveraged bitcoin bet. Buying the stock can deliver 1.5×, 2×, or more exposure compared to holding spot BTC.
These realities combine to create a justifiable, persistent premium over mNAV. That premium is the company’s operating room: capture it, convert it into bitcoin, reinforce the structures that sustain it, and lock forward-looking expectations into irreversible scarce ownership. In other words—make every slice of the pie thicker over time.
Limits of the strategy
A BTCTC can’t just print unlimited shares whenever mNAV is above 1.0 and expect the market to reward it indefinitely. If issuance becomes reckless, sentiment erodes and the premium disappears or turns negative. The premium is the justification for owning the stock instead of just BTC—investors are trading sovereignty for performance. Without that performance edge, there’s little reason to hold the equity.
Premiums collapsing and potential doom loop
In downturns, sentiment can flip. If investors believe bitcoin’s price will fall in the near term—even if their long-run view is bullish—they may rotate out of BTCTCs and into BTC itself. The result: the equity trades at or below mNAV. At sub-1.0 multiples, common issuance becomes destructive, and the “leveraged bitcoin bet” appeal evaporates.
Worse, if obligations like debt maturities or preferred dividends come due when the stock is below 1.0 mNAV, a BTCTC risks a doom loop: forced to sell bitcoin to meet obligations, the balance sheet shrinks, mNAV falls further, debt markets tighten, and equity holders price in even more stress. The spiral feeds on itself.
Tools for staying accretive below 1.0 mNAV
Fortunately, large, well-capitalized BTCTCs have tools to navigate these windows without resorting to destructive, and potentially doom-looping, common issuance:
Use operating cash to buy bitcoin or service obligations.
Raise debt or preferreds instead of common, preserving bps.
Repurchase stock below mNAV using available cash, lifting bps directly.
Issue high-strike convertibles so equity creation only happens later, at accretive levels.
Write options (cash-secured puts, covered calls) to generate cash flow for BTC buys.
Why scale matters
These tools are more available to the biggest BTCTCs—firms with the deepest liquidity, cheapest capital, and broadest access to debt and derivatives markets. This dynamic makes the space prone to a winner-takes-most outcome: the largest companies can weather volatility, while smaller peers that slip below 1.0 mNAV may become acquisition targets, another path for bigger players to grow their BTC stack—sometimes at a discount.
TL;DR
BTCTCs flip dilution: success is measured in bitcoin per share (bps), not dollars—new shares can increase bps.
Accretion rule: issuance is accretive if a share’s BTC value is greater than current bps, and destructive if it’s less.
Why premiums persist: forward-looking pricing, fiat inflation vs. BTC scarcity, demand for yield with hard collateral, and disciplined execution.
Risks: in downturns, premiums can collapse below 1.0×, risking a doom loop of forced BTC sales.
Survival tools: operating cash, debt/preferreds, converts, and options can help weather downturns; but only the biggest and/or most talented will survive