Through the Looking Glass: Bitcoin Treasury Companies

ArXiv ID: 2507.14910 “View on arXiv”

Authors: B K Meister

Abstract

Bitcoin treasury companies have taken stock markets by storm amassing billions of dollars worth of tokens in hundreds of entities. The paper discusses, how leverage - whether created through corporate debt or investors using stock as loan collateral - fuels this trend. The extension of the binary-choice Kelly criterion to incorporate uncertainty in the form of the Kullback-Leibler divergence or more generally Bregman divergence is also briefly discussed.

Keywords: Cryptocurrency Treasury, Leverage, Kelly Criterion, Kullback-Leibler Divergence, Asset Management

Complexity vs Empirical Score

• Math Complexity: 7.5/10
• Empirical Rigor: 3.0/10
• Quadrant: Lab Rats
• Why: The paper introduces advanced mathematical concepts like the Kelly criterion with Bregman divergence and uses Black-Scholes/put-call parity for modeling, but lacks any backtest-ready implementation details or empirical validation of the proposed financial structures.

  flowchart TD
    A["Research Goal: How does leverage fuel<br>Bitcoin treasury accumulation?"] --> B["Methodology: Extension of binary-choice<br>Kelly criterion with KL Divergence"]
    B --> C["Data/Inputs: Stock market data,<br>corporate debt structures, loan collateral trends"]
    C --> D["Computational Process: Model leverage via<br>debt & stock collateral; apply KL-divergence<br>to quantify uncertainty in asset returns"]
    D --> E["Key Findings: Leverage significantly<br>drives treasury growth; uncertainty-adjusted<br>Kelly criterion optimizes capital allocation"]