A guide to BTC treasury convertible bonds

May 3, 2026 convertibles, guide, education

A convertible bond is a hybrid instrument: a bond that can be converted into shares of the issuer’s stock under conditions set out in the prospectus. It sits between straight debt and direct equity issuance.

The global convertible market is roughly $300B. BTC treasuries currently account for about $20B of that — around 6.6% of the market. Convertibles are used disproportionately by smaller and unrated companies because the embedded equity option lowers the coupon they have to pay, which makes them especially common among BTC treasury issuers.

This guide walks through the terms that make up a convertible and explains, for each one, what is constructive or destructive from the issuer’s perspective. When a clause is described as “beneficial,” the meaning is beneficial for the company, not the bondholder.

How to read this guide

Starred terms (★) are the ones that materially shape the structure. The others are still part of the contract, but they rarely flip the thesis on their own.

Order:

Principal ★
Conversion premium ★
Duration ★
Coupon
Forced conversion ★
Ranking
Put provision ★
Rate type
Payment frequency
Use of proceeds ★
Settlement
Call provision
Denomination ★

Denomination appears last because it builds on several of the earlier terms, particularly forced conversion.

1. Principal ★

The capital raised by issuing the convertible.

A larger principal means more capital available for BTC purchases and more potential dilution if the bond converts. Principal is best read alongside the issuer’s existing share count, BTC holdings, and capital structure rather than in isolation.

2. Conversion premium ★

The conversion price expressed as a multiple of the stock price at issuance.

A higher conversion premium is beneficial for the company because the stock has to appreciate further before conversion becomes profitable for the bondholder, which limits dilution per dollar borrowed. Premiums of 35–55% are common for established BTC treasuries such as Strategy ↗.

The destructive variant is the death-spiral convertible, in which the conversion price is not fixed but moves with the stock — typically pegged to a discount of recent VWAP. As the stock falls, the conversion price falls with it, more shares are issued on conversion, and the resulting dilution can pressure the stock further.

BTC treasuries that have issued convertibles with floating or VWAP-linked conversion prices include:

DDC Enterprise ↗ — 88% of the lowest 20-day VWAP
Matador Technologies ↗ — lowest 10-day VWAP, added by amendment
Lion Group ↗ — 90% of the lowest 10-day VWAP, across three notes
Hyperscale Data ↗ — 85% of 3-day VWAP
London BTC Company ↗ — 95% of the lowest 10-day VWAP
iPower ↗ — adjustable, with a floor that has been reset downward
DevvStream ↗ — 200% of prior-day close, subject to downward adjustment
Vanadi Coffee ↗ — discount to weighted-average trading price

3. Duration ★

The years between issuance and maturity.

Longer duration is generally beneficial for the company. It gives the stock more time to clear the conversion threshold, which lets the bond extinguish itself in equity rather than cash. A short duration introduces the risk that the bond matures during a BTC drawdown, which can force the issuer to repay principal at the worst possible moment.

Five-year maturities are the institutional default for U.S.-listed BTC treasuries.

4. Coupon

The annual interest rate, usually paid semi-annually.

Convertible coupons are typically lower than what the same issuer would pay on straight debt, because the bondholder receives an embedded equity option in addition to the coupon. Many BTC treasury convertibles carry a 0% coupon — bondholders accept this in exchange for a lower conversion premium and the principal protection at maturity.

Coupon is a less structurally important term than the starred ones. A 0% coupon paired with a death-spiral conversion clause is materially worse than a 5% coupon paired with conventional terms.

5. Forced conversion ★

A clause allowing the issuer to compel conversion under specified conditions.

Forced conversion mechanics close the loop on a convertible: without them, the bondholder can sit on the option indefinitely. A typical clause from Capital B ↗’s 0% convertible notes due 2030 reads:

On or after the 3rd anniversary of issuance, the issuer may convert if VWAP over 20 consecutive trading days is greater than or equal to 130% of the conversion price.

Two conditions: a minimum elapsed time, and a price test based on a sustained premium to the conversion price.

The general pattern is that the trigger price for forced conversion is set above the conversion price (commonly 110–130%). At the moment forced conversion fires, the market price is therefore higher than the conversion price, and shares are issued at the lower (conversion) price. In effect, the company issues equity at a discount to the contemporary stock price.

This is not, on its own, unfavorable. The cash raised by the convertible was typically deployed into BTC at a much earlier (lower) stock price. The discount-to-spot at conversion is the implicit cost of the cheaper financing earlier in the life of the bond. Whether the trade was constructive depends on whether BTC outperformed the eventual dilution. This relationship matters most when reading the denomination clause.

6. Ranking

Where the instrument sits in the issuer’s capital stack.

A company’s debt is senior to common stock and to preferred instruments. Convertible bonds therefore rank above equity instruments. Within the debt stack, seniority is generally a function of maturity and any explicit subordination language in the indenture.

For most BTC treasuries, the convertible is the only material debt instrument outstanding, which makes ranking less consequential than in more complex capital structures.

7. Put provision ★

A clause giving the bondholder the right to redeem the bond early under specified conditions.

The put is one of the easiest terms to overlook. If the prospectus contains a clean, date-triggered put — for example, “holders may require repurchase at par on September 15, 2027” — then the effective duration of the bond is the put date, not the maturity date. If BTC is in a drawdown when the put window opens, the issuer may be forced to either pay cash or sell BTC.

Conservative put provisions, or no put provision, are beneficial for the company. Heavily conditioned puts (triggered only by a fundamental change, or only if the stock breaches a stated floor) are mostly cosmetic and do not meaningfully shorten effective duration.

BTC treasuries that have issued convertibles with clean date-triggered puts include Strategy ↗, MARA ↗, GameStop ↗, CleanSpark ↗, Twenty One ↗, Trump Media ↗, Bitcoin Treasury Corp ↗, BTC Standard ↗, and Bitmax ↗.

8. Rate type

Whether the coupon is fixed, floating, or step-up.

The vast majority of BTC-connected convertibles are fixed-rate. A small number carry a step-up coupon that increases on a stated schedule, including notes from Nakamoto ↗, Sequans ↗, and Matador ↗.

Floating coupons are uncommon in convertibles but appear in BTC-treasury preferreds — for example, Strategy ↗’s STRC and Strive ↗’s SATA.

9. Payment frequency

How often the coupon is paid.

A lower payment frequency is beneficial for the company because it reduces cash outflow. The most common patterns across BTC treasury convertibles:

No periodic payment — typical for 0% coupons, where any accrued interest is paid at maturity or rolled into conversion
Semi-annual — the institutional default for U.S.-listed issuers, paired with low coupons
Monthly — uncommon, paired with high coupons, and usually a feature of convertibles with other unfavorable terms

Quarterly and annual frequencies appear occasionally, mostly outside the U.S.

10. Use of proceeds ★

How the issuer intends to deploy the cash raised.

For BTC treasury convertibles, this term determines how directly the bond translates into BTC accumulation per share. Issuers such as Strategy ↗, Metaplanet ↗, Capital B ↗, and H100 ↗ typically commit 90%+ of proceeds to BTC purchases.

Other issuers state “general corporate purposes,” which gives the company discretion to allocate the proceeds across operating expenses, acquisitions, refinancing, or BTC at any ratio. “General corporate purposes” language is structurally weaker than an explicit BTC-purchase commitment when the goal is to translate the bond directly into BTC on the balance sheet.

11. Settlement

How the convertible is settled at conversion or maturity.

Settlement may be in cash, in shares, in BTC, or in some combination, depending on the prospectus. Some convertibles settle entirely in shares; some pay cash up to par and shares for any value above par; some leave the choice to the issuer at the time. Issuer-elected settlement provides modest flexibility, allowing the company to settle in whichever instrument is least costly when conversion occurs.

12. Call provision

The issuer’s right to redeem the bond before maturity at a specified call price.

Call provisions are beneficial for the issuer because they allow early extinguishment of the debt if the cost of capital changes or the bond becomes otherwise unfavorable. For Strategy ↗, the call provision generally mirrors the forced-conversion clause, providing a single coordinated mechanism to close out the bond once the stock has cleared the relevant trigger.

13. Denomination ★

The currency in which the bond is repaid if it is not converted.

Most convertibles are denominated in the same currency as the issuer’s stock — USD for Strategy ↗, JPY for Metaplanet ↗, EUR for Capital B ↗. A small number of BTC treasuries have issued BTC-denominated convertibles, in which the principal is owed in BTC: Smarter Web ↗, B HODL ↗, Bitcoin Treasury Capital AB ↗, and Capital B ↗ (multiple notes structured as effectively BTC-denominated). Connecting Excellence ↗ is a separate case in which the conversion ratio also moves with BTC.

The conversion outcome of a BTC-denominated convertible with a fixed conversion ratio is identical to a fiat-denominated one: a fixed share count delivered at the conversion price. The denomination only changes the redemption outcome. A fiat-denominated convertible repays a principal that does not move with BTC, which lets the issuer keep the BTC accumulated during the bond’s life on the balance sheet. A BTC-denominated convertible repays BTC that moves in lockstep with the BTC held against it; the asset and the liability cancel.

The constructive case for a BTC-denominated structure is timing — accumulating BTC at the issuance-day price and locking in a fixed conversion price for a future equity issuance, regardless of how high BTC or the stock rises. The trade-off is the lost fiat-loan accretion channel if the bond is redeemed rather than converted.

In general, fiat denomination is more beneficial for the company than BTC denomination, and the gap widens with maturity. Every additional year of duration is another year of BTC exposure funded by a static fiat liability — which is the entire point of using a convertible to hold BTC.

Term-by-term breakdowns for every BTC treasury convertible are available at halvex.xyz ↗.

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