- Adam Back has supported a new metric called “mNAV months-to-cover” (MmC) for evaluating Bitcoin treasury companies.
- MmC estimates how long it will take for a company to cover its high multiple of net asset value using its bitcoin yield per share.
- The formula is based on dividing a company’s mNAV multiple by its annual bitcoin yield per share.
- Experts note that the metric relies on strong assumptions and may be circular, as yield per share often results from the mNAV itself.
- The metric favors smaller startups with high growth rates and may not offer an effective risk-adjusted comparison for investors.
Adam Back has endorsed a new valuation metric called “mNAV months-to-cover” (MmC) for measuring the value of public companies with large bitcoin treasuries, such as MicroStrategy, MetaPlanet, Semler Scientific, Twenty One, or Nakamoto. The metric is designed to show how many months a company needs to cover or equalize its often high multiple-to-net asset value by using its bitcoin yield.
Companies holding significant amounts of bitcoin often trade at a value higher than their net assets, which in this context equals their bitcoin holdings. The industry has adopted the term “net asset value” (NAV) even though public companies do not officially have this figure defined. The formula for MmC divides the company’s mNAV multiple by its annual bitcoin yield per share, according to Back’s statement on X.
Yield per share, usually shown as a percentage such as 10%, is the amount of bitcoin a company adds to its holdings each year, adjusted for any share dilution. The assumption is that if both the mNAV and the yield per share remain constant, this metric will indicate the number of months required for a company to reduce its mNAV down to one—meaning its market value matches its bitcoin assets.
However, observers highlight several major problems with this approach. The bitcoin yield figure often depends on the mNAV itself, especially when companies raise funds through debt or by issuing preferred shares to buy more bitcoin. For example, MicroStrategy has issued several series of preferred shares with dividend payouts. The ability to do this on such terms results from trading at a high mNAV, making the metric circular and potentially misleading.
Another issue is that MmC tends to favor smaller or newer companies, which often post higher mNAV multiples and bitcoin yields due to rapid growth or smaller bases. This may push investors toward riskier startups over more established firms, even when the risk-adjusted returns may not be justified.
Because every bitcoin treasury company takes financial steps to increase its bitcoin yield, the core assumption behind MmC is that high mNAV values can persist despite these actions. Critics suggest that using this metric alone might not provide reliable guidance for investors looking for the best returns relative to risk.
As noted in a recent analysis, companies like MicroStrategy currently owe creditors more than $8 billion, reflecting the financial complexities behind these valuations. For more information on the discussion and the evolving role of NAV in bitcoin-treasury companies, visit Protos.
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