Twenty One Capital records a quarterly loss of $413.5 million: new CEO announces strategic pivot
The second quarter proved extremely painful for Twenty One Capital, a structure backed by Tether. The company's net loss reached $413.5 million, with the main cause being a deep correction in the cryptocurrency market. This forced the new CEO, Raphael Zagury, to publicly acknowledge the need for a fundamental transformation of the business.
Analysis of the financial statements shows that the key factor behind the losses was the revaluation of digital assets, which brought in $401.5 million — accounting for 97% of all losses for the period. Despite this, the company's balance sheet still holds a solid reserve of 43,514 BTC, equivalent to approximately $2.78 billion. This still makes Twenty One the world's second-largest public holder of bitcoin.
Financial position and market reaction
At the end of the quarter, the company had $106.1 million in cash, but debt on convertible bonds stood at $484.5 million. The market responded accordingly: the company's shares (ticker XXI) lost 1.7% in the last trading session, dropping to $4.5. Since the start of the year, the market capitalization of the shares has collapsed by nearly 50%, reflecting deep investor distrust of the current model.
New strategy: from treasury to conglomerate
The report appeared just three weeks after a change in management. In July, founder Jack Mallers stepped down as CEO to focus on developing the Strike payment project. As part of the reorganization, Strike also abandoned plans to merge with Twenty One, paving the way for an independent transformation.
The company is now considering acquiring the mining firm Elektron Energy, which Zagury previously led. In a letter to shareholders, the new CEO was extremely candid: Twenty One must prove its ability to create value beyond simply holding bitcoin. He called this an "advantage," but emphasized that to be attractive to investors, the firm must become something more.
Among the priorities for the coming year, Zagury highlighted strengthening corporate governance, creating or acquiring operating businesses, developing capital markets expertise, and building M&A processes. The ultimate goal is to launch a lending business providing loans backed by bitcoin. As a long-term benchmark, he cited Berkshire Hathaway — a strong balance sheet combined with independent cash flows.
Zagury also addressed the issue of undervaluation. Investors have long pointed to a significant discount to the value of bitcoin assets: the current mNAV ratio stands at 0.7x. This means the market values the company at 30% below its cryptocurrency reserves, which is a clear signal of distrust in management and strategy.
My comment: The situation at Twenty One Capital is a classic example of a crisis in the "bitcoin treasury" model amid volatility. The shift to a diversified holding company is a logical but extremely risky step. Success will depend on Zagury's ability not only to find profitable assets but also to convince the market that the new structure can generate stable cash flow, rather than just speculative gains from the rise in the price of the first cryptocurrency.