Understanding The Various Bitcoin Per Share Metrics

Bitcoin per share is one of the most important metrics for evaluating a Bitcoin treasury company. It measures how much bitcoin is attributable to each common share. However, there are several ways to calculate this figure, and each method provides different information about the economics of owning the common stock.

Understanding these differences is essential for evaluating a company's capital structure, measuring accretion, and determining the value attributable to common shareholders.

Raw Bitcoin Per Share

The simplest metric is raw Bitcoin Per Share (BPS).

BPS = Total Bitcoin Holdings / Common Shares Outstanding

This calculation divides the company's bitcoin holdings by its existing common shares. It provides a straightforward measure of how much bitcoin is attributable to each currently outstanding share.

The primary limitation is its treatment of potential dilution. A company may have warrants, convertible debt, or convertible preferred stock that could eventually become common shares. Raw BPS only counts existing shares, so it provides an incomplete picture of the potential future share count.

Bitcoin Per Assumed Diluted Share

Bitcoin Per Assumed Diluted Share (BPADS) addresses this limitation by incorporating the shares that would exist if all potentially dilutive securities converted into common stock.

BPADS = Total Bitcoin Holdings / Assumed Diluted Shares Outstanding

Because the assumed diluted share count is greater than or equal to the existing share count, BPADS is always less than or equal to raw BPS.

This metric became widely cited beginning in 2024, particularly as Bitcoin treasury companies began using increasingly complex capital structures.

BPADS provides a more conservative view of bitcoin ownership by incorporating potential dilution from outstanding securities. It becomes especially relevant for companies with substantial convertible debt, warrants, or convertible preferred stock.

However, its assumption of full conversion can be overly conservative.

Warrants and convertible debt may never convert if the common stock price remains below their conversion or exercise prices. Perpetual convertible preferred stock may also remain outstanding indefinitely if investors prefer receiving the preferred dividend rather than converting into common equity.

Consequently, BPADS represents a fully diluted scenario rather than a forecast of the actual future share count.

Net Bitcoin Per Share

Both BPS and BPADS share another major limitation: they measure gross bitcoin holdings without accounting for senior claims on the company's assets.

Common equity sits at the bottom of the capital structure. Debt holders and preferred shareholders generally have priority over common shareholders according to their contractual rights.

These senior claims matter because they reduce the assets ultimately attributable to common equity.

Net Bitcoin Per Share (Net BPS) addresses this by deducting the bitcoin equivalent of senior claims from total bitcoin holdings before dividing by the common share count.

The basic calculation is:

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

For example, a company with $1 billion in senior claims and a bitcoin price of $100,000 would need the equivalent of 10,000 bitcoin to satisfy those claims.

Those 10,000 bitcoin would therefore be deducted from gross bitcoin holdings when calculating Net BPS.

The denominator can use either existing common shares or an assumed diluted share count. However, the treatment must remain consistent: securities assumed to convert into common stock should have their extinguished senior claims removed from the numerator's deductions. This avoids counting the same obligation twice.

Should cash be included?

There are two useful approaches to calculating Net BPS.

The first applies cash and cash equivalents against senior claims before deducting the remaining obligations from bitcoin holdings.

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

Here, applied cash is limited to the amount available to offset senior claims. This method reflects the fact that cash can satisfy obligations, preserving more bitcoin for common shareholders. This is the methodology used by Strategy to compute their mNAV.

The second approach deducts the full value of senior claims from bitcoin holdings and reports cash separately. For example, investors could examine both Net BPS and Cash Per Share. This separation provides a clearer view of the company's bitcoin exposure alongside its independent cash reserves, at a per-share level.

Both approaches are useful. Including cash produces a more comprehensive measure of residual asset value, while excluding cash makes the company's bitcoin and cash positions separately visible.

Net BPS changes with bitcoin's price

A defining characteristic of Net BPS is its sensitivity to the price of bitcoin.

Raw BPS and BPADS depend on bitcoin holdings and share counts. Net BPS additionally depends on bitcoin's market price because senior claims are generally denominated in dollars.

As bitcoin appreciates, fewer bitcoins are required to cover a fixed dollar obligation, so more bitcoins remain attributable to common shareholders. When bitcoin depreciates, the opposite occurs.

Net BPS therefore rises with bitcoin's price and falls when bitcoin's price declines, assuming fixed senior claims, holdings, and share counts.

This relationship creates both a challenge and an important advantage.

Challenge: Measuring accretion correctly

The challenge is that changes in Net BPS over time combine the effects of corporate actions with changes in bitcoin's market price.

A rising bitcoin price can increase Net BPS even when a company's financing decisions destroy value for common shareholders. Conversely, falling bitcoin prices can obscure the benefits of genuinely accretive transactions.

This makes directly comparing observed Net BPS figures across different dates an unreliable method of evaluating management's capital allocation decisions.

However, raw BPS and BPADS are also inadequate measures of economic accretion.

Consider a company issuing debt to purchase bitcoin. Any positive amount of bitcoin purchased with debt increases raw BPS because bitcoin holdings rise while common shares remain unchanged. This holds regardless of the debt's interest rate or repayment obligations.

Similarly, issuing preferred stock to purchase bitcoin increases raw BPS even if the preferred stock is issued at a substantial discount to par and carries expensive dividend obligations.

These transactions increase gross bitcoin ownership per common share while potentially reducing the residual value attributable to common shareholders.

The proper way to measure economic accretion is to compare Net BPS before and after a transaction while holding the bitcoin price constant.

This isolates the effects of changes in bitcoin holdings, senior claims, cash, and share count.

It reveals whether a corporate action genuinely increases the bitcoin equivalent of the residual assets attributable to each common share.

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

Perhaps the greatest advantage of Net BPS is its connection to the economic value of common equity. When bitcoin is a company's primary treasury asset, Net BPS calculated with the appropriate cash adjustment approximates the bitcoin denominated liquidation value attributable to each common share.

(Note: by liquidation value, I mean the value that common stockholders would be entitled to if they liquidated the company, paid off all the claims, and divided the remainder amongst themselves. This has nothing to do with the "liquidation value" associated with leveraged, margin-callable trading positions. Actual recoveries in a real liquidation depend on the precise terms of senior securities, other assets and liabilities, liquidation expenses, and the taxable proceeds realized from asset sales.)

Multiplying Net BPS by the bitcoin price converts this amount into dollars. Investors can then compare that dollar figure with the common stock's market price to measure the premium or discount at which the shares trade relative to their estimated residual asset value.

This is an advantage that BPS and BPADS cannot offer. Because Net BPS accounts for senior claims, it provides a more direct measure of the assets that ultimately belong to common shareholders, making it the most relevant basis for comparison with the common stock's market price.

This connection to common equity liquidation value also explains why accretion is best measured through changes in Net BPS at a constant bitcoin price. Holding the price constant isolates the impact of corporate actions on the residual asset value attributable to each common share. And because Net BPS factors in both senior claims and common stock, it accounts for the impact of all possible corporate actions that involve issuance or repurchase of securities interests, while projecting the results of the impact onto the common stock.

Conclusion

Each Bitcoin per share metric serves a distinct purpose.

Raw BPS measures gross bitcoin holdings attributable to existing common shares. BPADS incorporates potential dilution. Net BPS accounts for senior claims and measures the residual bitcoin value attributable to common equity.

For evaluating the capital stack, Net BPS is the most comprehensive of the three. Holding bitcoin's price constant allows investors to isolate the economic effects of financing transactions and assess genuine accretion. Net BPS provides a direct connection between the company's balance sheet and the market value of its common stock.