Karla Barker 
Industry Metric Faces Criticism
Greg Cipolaro, NYDIG’s global head of research, made a strong statement this week about a commonly used metric in crypto investing. He believes the market to net asset value (mNAV) measurement should be completely removed from industry analysis. In his view, this metric doesn’t provide accurate information and might actually mislead investors who rely on it.
“The industry definition of ‘mNAV’ needs to be deleted and forgotten,” Cipolaro wrote in a research note. He was quite direct about his position, calling the original definition of mNAV as “market cap to bitcoin/digital asset value” something that serves no useful purpose.
Why mNAV Falls Short
The problem with mNAV, according to Cipolaro, comes down to what it doesn’t account for. Many crypto treasury companies have other business operations beyond just holding digital assets. Think about companies that develop software or provide services – their value extends beyond their crypto holdings. The mNAV metric ignores these additional revenue streams and assets.
Another issue involves convertible debt. When companies calculate mNAV, they often include shares that haven’t actually been issued yet – shares that would come from converting debt instruments. Cipolaro argues this approach isn’t correct from either accounting or economic perspectives. Convertible debt holders typically want cash, not shares, when they redeem their positions.
The Better Alternative
Cipolaro suggests investors should focus on net asset value (NAV) instead. This gives a clearer picture of what each share actually represents in terms of underlying assets. When companies can generate yield from their operations, they can potentially issue equity at a premium to their NAV. That’s the real value creation that matters.
The timing of this critique is interesting. It comes right after Strive Inc. acquired Semler Scientific – the first instance of one crypto treasury company buying another. In that deal, Semler shareholders received 21.05 shares of Strive for each share they held. Meanwhile, Strive shareholders saw their NAV per share increase from $1.14 to an expected $1.32 after the merger.
Looking Forward
Where these stocks ultimately trade remains uncertain. It depends on what premium or discount to NAV investors are willing to accept. But Cipolaro’s main point stands: we need better tools for evaluating crypto companies. Metrics that don’t reflect the full picture of a company’s operations and liabilities might do more harm than good.
Perhaps the industry will take this criticism to heart. After all, accurate valuation methods benefit everyone – companies seeking fair valuations and investors making informed decisions. The conversation about proper metrics is just beginning, and it’s one worth having as the crypto space continues to mature.