Twenty One Capital: quarterly loss of $413.5 million and a strategic pivot away from bitcoin treasury
The second quarter proved to be a period of significant financial losses for Twenty One Capital, a company backed by Tether. The structure's net loss reached $413.5 million, directly linked to the correction in the cryptocurrency market. This event coincided with important personnel changes: Rafael Zagury took over as CEO, who has already announced ambitious plans for business transformation.
Financial details and market position
Analysis of the report shows that the bulk of the losses — $401.5 million (97% of the total) — resulted from the revaluation of digital assets. Despite this, the company maintains an impressive portfolio: it holds 43,514 BTC on its balance sheet, equivalent to approximately $2.78 billion. This allows Twenty One Capital to rank second among public companies in terms of bitcoin reserves.
The financial position at the end of the quarter is characterized by $106.1 million in cash and convertible bond debt of $484.5 million. The market reaction was swift: XXI shares fell 1.7% to $4.5 in the latest trading session, and their value has dropped nearly 50% since the start of the year.
Change of course and new priorities
The report was published three weeks after the change in management. Twenty One founder Jack Mallers handed over the reins to Zagury in July, deciding to focus on developing his payment project Strike. As part of this reorganization, Strike also abandoned its plans to merge with Twenty One.
In a letter to shareholders, the new CEO openly admitted that the company's results raise questions and stated the need to "prove that we can create value beyond simply holding the first cryptocurrency." Among the key priorities for the coming year, he highlighted:
- strengthening corporate governance;
- creating or acquiring existing operating businesses;
- developing competencies in capital markets;
- building merger and acquisition processes;
- launching a lending business for bitcoin-backed loans.
As a long-term benchmark, Zagury cited Berkshire Hathaway, envisioning a strong balance sheet combined with independent operating companies generating cash flow. He also addressed the issue of undervalued capitalization: the current mNAV indicator (ratio of market capitalization to the value of bitcoin reserves) stands at 0.7x.
My view: Twenty One Capital's decision to diversify is extremely timely. The market is clearly not ready to pay a premium for simply holding bitcoin, especially amid volatility. However, the transition from a treasury to an operating structure is a long and complex process that will require not only financial resources but also serious managerial expertise. The success of this transformation will depend on Zagury's ability to find truly profitable and synergistic assets, rather than simply spending the bitcoin balance on dubious acquisitions.