The Main Bitcoin Per Share Metrics Explained

Bitcoin Magazine

One of the most important ways to judge a company that keeps bitcoin in its treasury is bitcoin per share, which shows how much of the company's bitcoin sits behind each common share. Yet the figure can be calculated in more than one way, and every approach conveys something different about the economics of holding the stock.

Knowing how the measures differ matters when judging a firm's capital structure, quantifying accretion, and working out how much value belongs to common shareholders.

Raw Bitcoin Per Share

The most basic figure is raw bitcoin per share, or BPS.

BPS = Total Bitcoin Holdings / Common Shares Outstanding

The company's bitcoin balance is divided by the number of common shares currently outstanding. That yields a direct figure for the bitcoin backing each existing share.

Its main shortcoming lies in how it handles possible dilution. Warrants, convertible debt, or convertible preferred stock can all be turned into common shares down the road. Because raw BPS counts only the shares already outstanding, the future share count is not fully captured.

Bitcoin Per Assumed Diluted Share

BPADS—bitcoin per assumed diluted share—closes that gap by assuming every potentially dilutive security has been converted into common stock and factoring in the resulting share count.

BPADS = Total Bitcoin Holdings / Assumed Diluted Shares Outstanding

Since the diluted share count can never be lower than the current one, BPADS never exceeds raw BPS.

Starting in 2024, this figure gained broad use, especially as treasury companies turned to more intricate capital setups.

By folding in the dilution that could arise from outstanding securities, BPADS offers a more cautious reading of bitcoin exposure. It matters most when a company carries large amounts of convertible debt, warrants, or convertible preferred stock.

Yet the assumption that everything converts may be too cautious in practice.

If the share price stays beneath the conversion or exercise price, warrants and convertible debt can remain unconverted. Perpetual convertible preferreds may likewise stay on the books if holders would rather collect the preferred dividend than swap into common shares.

BPADS is therefore a picture of full dilution, not a prediction of how many shares will actually be outstanding.

Net Bitcoin Per Share

BPS and BPADS have a second big flaw in common: both look at gross bitcoin holdings and ignore any senior claims on corporate assets.

Common stock is the last rung on the capital ladder. By contract, lenders and preferred shareholders usually stand ahead of common holders.

Those claims are important because they shrink what is ultimately left for common equity.

Net Bitcoin Per Share (Net BPS) handles this by subtracting the bitcoin value of senior claims from total holdings, then dividing by common shares.

The base formula is:

Net BPS = (Total Bitcoin Holdings − Senior Claims / Bitcoin Price) / Common Shares

Suppose a firm has $1 billion of senior claims and bitcoin trades at $100,000. Meeting those claims would take the equivalent of 10,000 bitcoin.

So Net BPS would subtract those 10,000 bitcoin from gross holdings.

The denominator may be current common shares or an assumed diluted count. Whichever is chosen, the treatment has to stay consistent: if a security is assumed to turn into common stock, its senior claim should be dropped from the deductions in the numerator. That way the same obligation is not counted twice.

Should cash be included?

Net BPS can be computed in two sensible ways.

One method uses cash and cash equivalents to offset senior claims first, and only the remaining obligations are deducted from the bitcoin balance.

Net BPS = [Bitcoin Holdings − (Senior Claims − Applied Cash) / Bitcoin Price] / Common Shares

Only cash actually available to cover senior claims counts as applied cash. Because cash can be used to settle obligations, this approach leaves more bitcoin for common shareholders, and it is the method Strategy uses when computing its mNAV.

The other route subtracts all senior claims from bitcoin holdings and reports cash on its own. An investor might look at Net BPS and cash per share side by side. That split makes it easier to see the firm's bitcoin exposure and its cash reserves independently on a per-share basis.

Both have value. Adding cash gives a fuller view of residual assets, while leaving it out keeps bitcoin and cash positions distinct.

Net BPS changes with bitcoin’s price

Net BPS is distinctive because it moves with bitcoin's price.

Raw BPS and BPADS rely only on bitcoin holdings and share counts. Net BPS also hinges on the market price of bitcoin, since senior claims are usually stated in dollars.

When bitcoin rises, a fixed dollar obligation can be covered with fewer coins, leaving more bitcoin for common holders. A falling price works in reverse.

So, with senior claims, holdings, and share count held fixed, Net BPS climbs as bitcoin's price goes up and drops as it goes down.

That linkage brings both a difficulty and a major benefit.

Challenge: Measuring accretion correctly

The problem is that a shift in Net BPS from one period to another mixes the results of corporate moves with fluctuations in bitcoin's price.

A higher bitcoin price can lift Net BPS even if management's financing choices are eroding common shareholder value. In the opposite case, a declining price can hide the payoff from truly accretive deals.

As a result, comparing Net BPS numbers from different dates is a poor way to judge whether executives have allocated capital well.

But raw BPS and BPADS do not measure economic accretion well either.

Take a firm that borrows to buy bitcoin. No matter how much it buys with the borrowed funds, raw BPS goes up because holdings increase while the share count stays the same. That is true whatever the debt's interest rate or repayment terms.

In the same way, selling preferred shares to fund bitcoin purchases lifts raw BPS even when the preferreds are issued well below par and carry costly dividend commitments.

Such deals raise gross bitcoin per share even as they may cut the residual value left for common holders.

The correct test of economic accretion is to compare Net BPS before and after a transaction with bitcoin's price held steady.

That isolates the impact of shifts in bitcoin holdings, senior claims, cash, and share count.

It shows whether an action truly adds to the bitcoin-denominated residual assets behind each common share.

Advantage: Net BPS as a measure of common equity liquidation value

Net BPS's biggest strength may be how directly it ties to the value of common equity. For a company whose treasury is mostly bitcoin, Net BPS with the right cash adjustment comes close to the bitcoin-denominated liquidation value behind each common share.

(Note: liquidation value here refers to what common stockholders would receive if the company were wound up, all claims were settled, and whatever remained were split among them. It is unrelated to the “liquidation value” tied to leveraged, margin-callable trading positions. What holders actually recover in a real liquidation hinges on the exact terms of senior securities, other assets and liabilities, liquidation costs, and the taxable proceeds from asset sales.)

Multiplying Net BPS by the price of bitcoin turns the figure into dollars. That dollar amount can then be set against the market price of the common stock to see whether the shares trade at a premium or discount to estimated residual asset value.

BPS and BPADS cannot do that. Since Net BPS subtracts senior claims, it points more directly to the assets that end up with common shareholders, which makes it the best benchmark against the market price of the common stock.

That link to common equity liquidation value is also why accretion should be measured through Net BPS movements at a fixed bitcoin price. A steady price separates the effect of corporate actions from the residual value per share. Because Net BPS captures both senior claims and common stock, every corporate action involving the issue or repurchase of securities is reflected in its effect on the common stock.

Conclusion

Each bitcoin-per-share metric answers a different question.

Raw BPS shows the gross bitcoin behind current common shares. BPADS adds the effect of possible dilution. Net BPS takes senior claims into account and captures the residual bitcoin value belonging to common equity.

When judging a company's capital stack, Net BPS is the most complete of the three. With bitcoin's price held steady, investors can separate the economic impact of financing moves and measure true accretion. Net BPS also links the balance sheet directly to the market value of the common stock.

Disclaimer: This material was put together for Bitcoin For Corporations and is provided for information only. It represents the author's own views and analysis, not investment advice. Nothing here is an offer, invitation, or solicitation to buy, sell, or subscribe for any security or financial product.