Crypto Treasury Craze Cracks as Firms Start Borrowing to Buy Back Share

Group 1 - The trend of small-cap firms loading their balance sheets with cryptocurrencies is beginning to show signs of distress, as many are now resorting to debt-funded share buybacks to support falling stock prices [2][8] - At least seven companies, including those in online gaming, golf cart manufacturing, and biotech, are actively buying back their shares [2] - Market values of some firms have fallen below the worth of their crypto assets, indicating investor skepticism about the sustainability of the crypto treasury strategy [3][8] Group 2 - The acquisition of Semler Scientific by Strive Asset Management highlights how companies trading below the value of their crypto holdings are becoming attractive for takeovers [4] - ETHZilla, which rebranded and invested in ether tokens, experienced a 76% drop in stock price from its peak, illustrating the volatility associated with crypto investments [4] - Empery Digital has expanded its debt facility to $85 million for share buybacks, despite holding $476 million in Bitcoin, which exceeds its $378 million market cap [6] Group 3 - Analysts express concerns that using debt for share repurchases contradicts the foundational principles of the crypto treasury model, which relies on the appreciation of digital assets [5][6] - Companies like SharpLink Gaming, Ton Strategy, and CEA Industries are also implementing similar buyback strategies after their token-heavy approaches failed to perform in the market [7][8]