Twenty One CEO says Bitcoin treasury premium era is ending

Raphael Zagury, who became Twenty One Capital’s CEO effective July 20, told the SEC in a July 22 filing that the practice of issuing shares above net asset value to buy more Bitcoin is a temporary market dislocation that should compress toward 1x net asset value.

Zagury described the common strategy of raising capital at a premium to add BTC as an unsustainable source of returns as more firms adopt the approach. “There’s no free money forever,” he told regulators, adding that premiums could reappear but should not be relied on as the sole source of shareholder gains.

To create other sources of returns, Twenty One refreshed priorities it outlined in May. The company plans to buy or build operating businesses that generate cash flow, expand capital-markets capabilities, develop Bitcoin-backed financial products and create a Bitcoin-native lending platform. Any acquisition will need to be accretive when measured against simply holding Bitcoin.

Zagury pointed to mining as an example of a cash engine, comparing its potential role to how insurance float supplies capital for other investments. He cautioned that Twenty One has not yet finalized an operating model and that execution will be difficult. A potential combination with Elektron Energy, a mining business whose management team Zagury leads, remains preliminary; no definitive agreement has been signed and a deal is not assured.

Twenty One’s first-quarter filing reported 43,514 BTC on its balance sheet as of March 31. The same filing showed no operating-revenue line and recorded a $10.57 million loss from operations, indicating the planned cash-generating businesses had not yet contributed to reported results. Zagury used a hypothetical example of exchanging 50 BTC from a 100-BTC treasury for a cash-generating company but did not announce any actual sales of treasury assets.

The leadership change followed Jack Mallers’ resignation as CEO and director. The company said Mallers’ departure was unrelated to any disagreement and that he will focus on his work at Strike. Twenty One also said it is no longer pursuing a combination with Strike.

Asked about trying to outperform Bitcoin, Zagury said matching Bitcoin’s value with lower volatility could be a reasonable outcome and that outperforming over time would require either exceptional opportunities or irresponsible leverage. He framed mining and other operating businesses as a route to deliver better risk-adjusted returns when measured in Bitcoin terms.

The plan shifts Twenty One away from primarily relying on market premiums toward building operating income. Executives must complete acquisitions, integrate operations and demonstrate accretion against Bitcoin before the company can show the new model delivers the returns Zagury described.