Companies buying bitcoin see big share price gains: what could go wrong?

There is a growing number of companies investing in cryptocurrencies, even though it might have no relevance to their day-to-day business. This emerging trend has caught the attention of certain investors, who have bid up shares in many companies to excessive valuations.

One example – a web design agency called The Smarter Web Company – saw its valuation jump from £3.7 million in April to more than £1 billion two months later, fuelled by hype around its bitcoin investments.

Investors need to take care in these situations. Prices can often move fast – both up and down – and valuations have moved out of kilter with the underlying fundamentals of the company. Smarter Web Company is currently valued at £933 million yet it would only get £42 million from selling its entire stash of bitcoin at the market price at the time of writing (24 June 2025).

There are similarities to the meme stock craze during the pandemic, where investors co-ordinated their efforts on social media forums to bid up certain shares, paying no regard to the sales and profits of these companies. Names like GameStop raced ahead before crashing back down. We also saw similar movements when the artificial intelligence boom happened, with certain stocks rising in price and then rapidly falling.

What is a bitcoin treasury company?

The number of UK stocks that fall under the category of ‘bitcoin treasury companies’ is growing by the day. The names include Amazing AI, Vault Ventures and TruSpine Technologies. The US stock market also has various companies investing in cryptos alongside their day job, including Tesla and GameStop.

Many of the companies say they are stockpiling bitcoin as an alternative way to hold money in reserve than cash. However, many of the smaller companies jumping on the bandwagon are giving investors the impression that bitcoin investments are now their priority interest.

One company says it is buying bitcoin as a hedge against inflation and geopolitical events. Another says its position as a mining company means that owning bitcoin gives it ‘downside protection through real-world assets, and upside potential through digital currency exposure’.

It’s important to judge a potential investment on various factors, including an understanding of what the company does, the value of its underlying assets, and its prospects. It can be a mistake to choose an investment simply because its share price is racing ahead or there is a lot of hype on social media.

It’s the same as making a considered purchase like buying a new car – you would look at what’s under the bonnet, its track record, cost relative to other vehicles and so on. You wouldn’t simply buy a certain model because someone down the pub said it was good.

Accessing bitcoin through an ISA or pension

MicroStrategy – which has since been renamed Strategy – is arguably the grandfather of the sector. It has been a popular stock among UK retail investors over the past few years, as a way to access the bitcoin market without directly owning the cryptocurrency.

UK investors are not permitted to hold bitcoin directly in an ISA or SIPP (Self-invested personal pension), so they’ve looked at alternative ways to get exposure. While Strategy is a data analytics company, most people know it for holding a large amount of bitcoin. It has continued to raise more money to fund bitcoin purchases and now owns $63.2 billion worth of the cryptocurrency.

The bitcoin price is driven by speculation, which makes it hard to calculate what it should really be worth. We’ve seen large swings in the bitcoin price in recent years, and this volatility can be alarming for anyone who holds the crypto directly or has exposure through the type of stocks mentioned in this article. Ultimately, so-called bitcoin treasury companies are high-risk investments and may not be suitable for many investors.