UK small-cap firms are adopting MicroStrategy’s Bitcoin treasury model

Several UK-listed small-cap companies are now copying a controversial American playbook that turned a tech firm into a full-on Bitcoin proxy.

The plan is simple but aggressive: issue new shares, raise cash, and buy Bitcoin. Executives hope this move will push their stock prices higher by giving investors indirect exposure to crypto, something that’s still difficult to access in the UK.

This development was brought to our attention by Axel Cabrol, Co-Deputy CIO at TOBAM, whose research paper Accounting for the Performance of MicroStrategy shows that British firms are now trying to do what MicroStrategy did in the US between 2020 and 2024, when it massively outperformed Bitcoin itself using a Bitcoin treasury strategy.

Axel believes that while this model isn’t without risk, it could be one of the few tools available to revive UK equities. He also made it clear that just because a company adds Bitcoin to its balance sheet doesn’t mean it’ll succeed.

“Bitcoin adoption is no magic wand that turns lead into gold,” said Axel, warning that companies must know what they’re doing and whether the strategy fits their business.

MicroStrategy outperforms Bitcoin using a three-pronged structure

Between 2021 and 2024, MicroStrategy’s stock jumped 7.5x, while Bitcoin rose just 3.2x. According to TOBAM, the outperformance came from three things: turning the stock’s premium into book value and buying more Bitcoin with it, increasing exposure to Bitcoin over time through that same mechanism, and taking advantage of spikes in the premium at which its stock traded compared to the value of its Bitcoin holdings.

TOBAM’s study, conducted by Axel along with Yves Choueifaty and Tristan Froidure, says the strategy works best when the company can issue new shares at a premium, then use that money to buy more Bitcoin, generating something they call a “Bitcoin Yield.”

When the company sells shares at inflated prices and turns that cash into more Bitcoin, it boosts its exposure and stock performance. In 2021 and 2024, MicroStrategy managed to generate a Bitcoin Yield of around 50%.

But of course, the strategy isn’t perfect. In 2023, even though the company added 43% more Bitcoin to its holdings, it had to increase its number of shares by 48%. That meant the Bitcoin Yield turned negative and dragged on the stock’s performance.

Bitcoin Price Premium gives investors more than coin performance

The paper explains that performance also depends on how far the company’s shares trade above the value of the Bitcoin it holds. This is called the Bitcoin Price Premium, and it fluctuates based on demand. MicroStrategy’s returns were boosted when this premium grew.

If the premium had stayed flat in 2021, shareholders would have nearly doubled Bitcoin returns anyway. But because the premium expanded in 2023 and 2024, investors got more—up to three times Bitcoin’s performance in some periods.

Exposure also played a role. The company’s realized exposure to Bitcoin (β) was sometimes higher than one. In 2022, during a crypto sell-off, the firm’s stock traded at a discount to its Bitcoin, which pushed its exposure above normal. In 2024, the company started with a relatively low beginning-of-year exposure (β₀ = 0.75), but the massive 61% Bitcoin Yield that year pushed realized exposure to 1.2.

In simple terms, MicroStrategy found ways to give shareholders more upside than Bitcoin itself. This is exactly what UK firms want. But the model only works if the company knows how to manage dilution, time the issuance of shares, and buy Bitcoin strategically. If they screw up the balance, the strategy can collapse fast.

Axel said the recent moves by UK small caps to mimic this structure could finally give British retail and wealth investors a practical way into crypto markets. “This will also allow UK wealth and retail investors to gain exposure to cryptocurrency where it has previously been more challenging,” he said. With the UK far behind the US in regulated crypto investment options, this indirect route might be the only access some investors have for now.

But TOBAM’s research ends on a warning. Axel, Yves, and Tristan made it clear that this model is not a guaranteed fix. Execution is everything. If done wrong, the company ends up with diluted equity and poor returns. If done right, it could be the last card these firms play to stay listed and to finally get some attention from markets that have mostly forgotten them.

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