Renowned short-seller Jim Chanos, famous for his bets against the Enron corporation, has recently expressed doubts about the business model of Bitcoin treasury companies, particularly the company Strategy.
Questions Regarding Bitcoin Treasury Value
Chanos, on his X social media page, probed the issue of whether the value of companies like Strategy comes from their Bitcoin investments or if it's related to the market premium over net asset value (mNAV).
> The Fundamental Bitcoin Treasury Company Question: Does the business model of raising capital to simply buy Bitcoin create the mNAV premium, or does the existence of an mNAV premium create/allow the business model?
— James Chanos
Responses from Supporters of Strategy
Jeff Walton, a prominent Strategy bull, argues that Bitcoin acts as collateral enabling the company to raise cheap capital. "This idea is so simple it sounds too good to be true," Walton noted. He also pointed out that Strategy has eight times more capital than the peak valuation of Chanos's hedge fund, Kynikos Associates, in 2008.
Expert Opinions and Potential Risks
Chanos, whose fund specializes in identifying overvalued and fraudulent companies, has recently placed a bet against Strategy while simultaneously hedging with Bitcoin buys. He believes that the current premium associated with Strategy is unjustified and fueled by hype from retail investors. The crux of Chanos's bet is that this premium will eventually dissipate due to the existence of more efficient alternatives like Bitcoin ETFs.
Meanwhile, Saylor warned that Chanos could face liquidation if his company's shares surge. Simon Gerovich, CEO of Japanese Strategy copycat Metaplanet, is also encouraging the famed short-seller to bet against his company.
The situation surrounding Bitcoin treasury companies and the views of experts like Jim Chanos raises significant questions about pricing models in the cryptocurrency sector and the potential risks associated with such investments.
