DATs' Growth Strategies and New Era

DATs Enter a New Era

The world of Digital Asset Treasuries (DATs) has entered a new era with the announcement of an all-stock deal between Strive (ASST) and Semler Scientific (SMLR). This agreement is recorded as the first merger bringing together two publicly traded Bitcoin treasuries. According to a Wall Street banker, this situation represents the beginning of a major wave of consolidation among DATs.

Three Core Strategies

Evaluating the deal, the banker summarized DATs' growth strategies under three main headings: mergers, cash-flow generating acquisitions, and corporate partnerships.

Increasing BTC through Mergers

The first path is for DATs to merge with each other, combining their Bitcoin (BTC) holdings. Strive's acquisition of Semler serves as a clear example of such mergers, increasing Bitcoin value per share and offering the opportunity for unified management. Once the deal is complete, the new company will hold approximately 11,000 BTC in total, including Strive's acquisition of 5,885 Bitcoin.

Acquisition of Cash-Flow Generating Businesses

The second strategy is the acquisition of cash-flow generating businesses. This presents an opportunity to offset share dilution and finance ongoing Bitcoin purchases. Metaplanet, Japan's largest Bitcoin holder, has announced its plan to use its treasury to acquire income-generating businesses.

Corporate Mergers Instead of SPACs

The third path involves merging with real businesses instead of special purpose acquisition companies (SPACs). SPACs are shell firms created to allow companies to go public. However, SPAC processes can be complex and involve challenges such as shareholder votes, regulatory filings, and investor redemptions. Therefore, DATs merging directly with companies that have existing operations and management structures entails less risk.

In conclusion, DATs need to evolve their growth strategies. Other companies, such as FRNT Financial, are also keeping pace with this trend. FRNT has entered into a consulting agreement with a DAT holding $100 million in digital assets, and under this agreement, it will provide support to evaluate and structure financial opportunities during the company's growth phases.