Twenty One Capital: quarterly loss of $413.5 million and a strategic pivot away from bitcoin treasury
The second quarter proved to be extremely painful for Twenty One Capital. The Tether-backed company recorded a net loss of $413.5 million, with the correction in the digital assets market being the main driver of losses. The revaluation of the cryptocurrency portfolio brought a $401.5 million loss—about 97% of all losses for the reporting period. However, despite this, the entity's balance sheet still holds 43,514 BTC, equivalent to approximately $2.78 billion, and this remains the second-largest public reserve of the leading cryptocurrency in the world.
The company's financial position looks mixed: $106.1 million in cash against $484.5 million in convertible bond debt. The market is reacting accordingly—XXI shares lost 1.7% in the last session, dropping to $4.5, and since the start of the year, the stock has plunged nearly 50%. This is a classic scenario for bitcoin treasuries during a bearish trend: investors discount reserves, fearing debt burdens and the lack of operational cash flow.
New strategy: from holding to conglomerate
The report was released three weeks after a management change. In July, Twenty One founder Jack Mallers stepped down as CEO, handing the reins to Raphael Zagury, who returned to developing the Strike payment project. As part of the reorganization, Strike also abandoned plans to merge with Twenty One, signaling the company's independent path.
Zagury has already outlined an ambitious goal: to transform Twenty One from a passive bitcoin treasury into a full-fledged operational structure. In a letter to shareholders, he openly admitted that current results raise questions and that the company must prove its ability to create value beyond simply holding BTC. Among the priorities for the coming year are strengthening corporate governance, acquiring operating businesses, developing capital markets expertise, and launching a lending arm offering bitcoin-backed loans. As a long-term benchmark, the new CEO cites Berkshire Hathaway: a strong balance sheet combined with independent operating companies generating stable cash flow.
Interestingly, the mining firm Elektron Energy, previously led by Zagury himself, has already come into the company's sights. This could be the first step toward diversification.
However, it is worth noting that the market currently values Twenty One at a discount: the mNAV metric (ratio of market capitalization to the value of bitcoin reserves) stands at just 0.7x. This suggests that investors do not buy the simple story of holding BTC and are waiting for concrete actions. Against the backdrop of losses among corporate treasuries, which amounted to billions of dollars in July, Zagury's strategy looks like a logical attempt to reset the business model. The only question is whether the company will have enough time and resources to transform before the next round of market turbulence.