2024 Crypto IPO Boom: SPACs to Replace Traditional Shell Mergers as Bitcoin Companies Gear Up

Original Article Title: SPAC to the Future

Original Article Author: Prathik Desai, TOKEN DISPATCH

Original Article Translation: Luffy, Foresight News

In 2020, the Strategy company (then known as MicroStrategy) began using debt and stock swaps to acquire Bitcoin. This company, originally selling enterprise software, under the leadership of co-founder and chairman Michael Saylor, underwent a transformation, injecting company funds into Bitcoin, becoming the largest Bitcoin holder among publicly traded companies.

Five years later, the Strategy company is still selling software, but the contribution of its operations to the company's overall gross profit has been steadily declining. In 2024, the operating gross profit decreased to about 15% from 2023; in the first quarter of 2025, this number dropped by 10% compared to the same period last year. By 2025, the Strategy's model had been replicated, adapted, and simplified, paving the way for over a hundred publicly traded entities to hold Bitcoin.

The model is straightforward: issuing low-cost debt backed by the enterprise, buying Bitcoin, issuing more debt to buy more Bitcoin after its appreciation—forming a self-reinforcing cycle that turns the company treasury into a leveraged cryptocurrency fund. Maturing debt is repaid by issuing new shares, diluting existing shareholder equity. However, the appreciation of the Bitcoin holdings boosts the stock price, offsetting the dilution effect on equity.

Most companies following in Strategy's footsteps already have existing businesses, hoping to benefit their balance sheets with Bitcoin as an appreciating asset.

Strategy was formerly a business analytics and business intelligence platform only; the 15th largest publicly traded Bitcoin holder, Semler Scientific, used to be a pure health tech company; and the recently joined Bitcoin reserve club, the attention-grabbing GameStop, was previously a well-known game and electronics retailer until recently entering the Bitcoin treasury-building arena.

Now, a new wave of companies is eager to reap the benefits of Bitcoin but does not want to bear the burden of building a physical business. They have no customers, no revenue model, and no operational roadmap. They only need a balance sheet filled with Bitcoin and a fast track to enter the public market through financial shortcuts. Thus, Special Purpose Acquisition Companies (SPACs) have emerged.

These Bitcoin assets SPACs, such as ReserveOne, ProCap (backed by Anthony Pompliano), Twenty One Capital (backed by Tether, Cantor Fitzgerald, and SoftBank), are launching straightforward packaging schemes. Their proposition is clear: raise billions of dollars, mass-purchase Bitcoin, and give public market investors a stock ticker to track it all. That's it, that's the whole business.

These newcomers' approach is the opposite of Strategy: Accumulate Bitcoin first, then consider the business part. This model is more like a hedge fund than a corporation.

However, many companies are still lining up to choose the SPAC route. Why is that?

SPAC is a pre-funded shell company that raises funds from investors (usually a group of private investors), goes public on a stock exchange, and then merges with a private company. It is often described as a shortcut to an IPO. In the cryptocurrency space, this is a way to quickly list an entity heavily invested in Bitcoin to avoid market sentiment or regulatory shifts that may be unfavorable, where speed is key.

Although this "speed advantage" is often illusory. SPACs promise to complete the listing in 4-6 months, while an IPO takes 12-18 months, but in reality, regulatory reviews for cryptocurrency companies take longer. For example, Circle attempted to go public via SPAC but failed, then succeeded through a traditional IPO.

But SPACs still have their advantages.

They allow these companies to outline bold visions, such as "reach a $1 billion Bitcoin holding by the end of the year," without having to immediately undergo the rigorous scrutiny of the traditional IPO process. They can bring in post-listing private investments (PIPE) from heavyweight companies like Jane Street or Galaxy, pre-negotiate valuations, package them in SEC-compliant shell companies, while avoiding being labeled as an "investment fund."

The SPAC route simply makes it easier for companies to sell their strategies to their stakeholders and investors because there is nothing else to sell besides Bitcoin.

Remember the scenarios when Meta and Microsoft considered incorporating Bitcoin into their treasuries? They faced overwhelming opposition.

For retail investors, a SPAC may seem to offer a pure Bitcoin exposure without directly dealing with cryptocurrency, similar to buying a gold ETF.

However, SPACs also face retail investor acceptance issues as they tend to prefer obtaining Bitcoin exposure through more popular channels like Exchange-Traded Funds (ETFs). The 2025 Institutional Investor Digital Asset Survey showed that 60% of investors are more willing to access cryptocurrency through regulated investment tools (such as ETFs).

Nevertheless, the demand still exists because this model implies leverage potential.

The strategy of buying Bitcoin does not stop there but continues to issue convertible notes (likely through issuing new shares for redemption). This approach helped transform this once business intelligence platform into a Bitcoin "turbocharger": during Bitcoin's price surge, its stock price outperformed Bitcoin itself. This blueprint still resonates with investors: a Bitcoin company based on a SPAC could replicate this acceleration pattern—buying Bitcoin, issuing more stock or debt to buy more Bitcoin, and so on.

When a new Bitcoin company announces a $1 billion institutional PIPE investment, it conveys credibility itself, indicating that large funds are paying attention to the market. Consider how much credibility Twenty One Capital gained due to heavyweight companies such as Cantor Fitzgerald, Tether, and SoftBank backing it.

SPACs enable founders to achieve this goal in the early stages of the company's lifecycle without having to build a revenue-generating product first. This early institutional recognition helps to garner attention, capital, and momentum for development while reducing the pushback from investors that a publicly traded company might face.

For many founders, the attraction of the SPAC route lies in its flexibility. Unlike an IPO, where disclosure timing and pricing are very strict, SPACs have greater control over the narrative, forecasts, and valuation negotiations. Founders can tell a forward-looking story, set out capital plans, retain ownership, and avoid the endless financing cycle of the traditional "VC to IPO" path.

This packaging itself is appealing. Publicly offering shares is a well-known language: the stock can be traded by hedge funds, added to retail platforms, and tracked by ETFs. It is a bridge connecting the native ideas of crypto with traditional market infrastructure. For many investors, this packaging is more important than the underlying mechanics: if it looks like a stock, trades like a stock, it can integrate into existing portfolios.

If a SPAC can be established and listed without any existing business, how will they operate? Where will the revenue come from?

SPACs also allow for creativity in structure. A company can raise $500 million, invest $300 million in Bitcoin, and use the remaining funds to explore revenue strategies, launch financial products, or acquire other crypto companies that generate income. This hybrid model is hard to achieve in an ETF or other structures because those models have stricter rules and more rigid governance.

Twenty One Capital is exploring structured asset management. With a Bitcoin reserve of over 30,000 coins, it is also using a portion for low-risk on-chain revenue strategies. The company merged with a SPAC backed by Cantor Fitzgerald and raised over $585 million through PIPE and convertible bond financing to purchase more Bitcoin. Its roadmap includes building a Bitcoin-native lending model, capital market tools, and even creating Bitcoin-related media content and promotional activities.

Nakamoto Holdings, founded by David Bailey of Bitcoin Magazine, took a different path to achieve a similar goal. It merged with a publicly traded healthcare company, KindlyMD, to build a Bitcoin treasury strategy. This deal secured $510 million in PIPE and $200 million in convertible note financing, making it one of the largest crypto-related fundings. It aims to securitize Bitcoin exposure into stocks, bonds, and hybrid instruments to trade on major exchanges.

Meanwhile, Pompliano's ProCap Financial plans to offer financial services on top of a Bitcoin treasury, including crypto lending, staking infrastructure, and creating products for institutions to earn Bitcoin rewards.

ReserveOne is taking a more diversified approach. While Bitcoin remains core to its portfolio, it plans to hold a basket of assets like Ethereum, Solana, engaging in institutional-grade staking, derivatives, and OTC lending using these assets.

With support from companies like Galaxy and Kraken, ReserveOne positions itself as the crypto-native BlackRock, combining passive exposure with active income generation. In theory, its revenue comes from lending fees, staking rewards, and managing the spread between short and long-term bets on cryptocurrency assets.

Even if the entity has found a sustainable revenue model, the label of a "publicly traded company" still brings paperwork and challenges.

Post-merger operations highlight the necessity of a sustainable revenue model. Aspects such as fund management, custody, compliance, and auditing have become crucial, especially when the sole product is a highly volatile asset. Unlike ETF issuers, many companies backed by SPACs are built from the ground up, with custody potentially outsourced, governance possibly weak, and risks accumulating rapidly under the radar.

Furthermore, there are governance issues to consider. Many SPAC sponsors retain special rights, such as enhanced voting power, board seats, and liquidity windows, but they often lack expertise in cryptocurrency. When the price of Bitcoin plummets or regulations tighten, experts are needed at the helm. When the market is on the rise, no one pays attention; but when it falls, the issues are exposed.

So, how should retail investors respond?

Some may be drawn by the upside potential, thinking that a small bet on a Bitcoin SPAC could recreate the prosperity of a previous strategy. However, they will also face multiple risks, such as share dilution, volatility, redemptions, and unproven management team performance. Others may prefer the simplicity of a physical Bitcoin ETF or even directly holding Bitcoin.

Because when you buy shares of a Bitcoin company listed through a SPAC, you are not directly holding Bitcoin but are buying into someone else's plan to buy Bitcoin on your behalf and hoping for their success. This hope comes at a cost, and in a bull market, this cost seems worth it.

However, you still need to understand what you are actually buying and how much.

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