Cathedra Bitcoin, a Canadian Bitcoin mining company, has decided to pivot from its traditional mining operations after evaluating the return on investment for shareholders over the past three years. The firm is now adopting a new strategy inspired by MicroStrategy’s approach—purchasing Bitcoin from the open market to increase its Bitcoin reserves.
New Bitcoin Reserve Strategy
In a memo dated September 16, Cathedra announced that it will now focus on maximizing Bitcoin holdings per share, a key metric for many of its shareholders. According to the company, this shift formalizes a mindset they have held loosely but have not previously pursued with discipline.
The decision comes after the company concluded that Bitcoin mining has not provided sufficient value for shareholders in terms of Bitcoin accumulation. Cathedra highlighted that nine out of the ten largest Bitcoin miners by market capitalization currently hold less Bitcoin per share compared to three years ago.
Learning from MicroStrategy
MicroStrategy’s approach to boosting Bitcoin reserves has been a key inspiration. Cathedra observed that firms like MicroStrategy, which have explicitly focused on increasing Bitcoin per share, have been rewarded by equity markets. The plan is for Cathedra to do the same—shifting capital allocation towards increasing Bitcoin reserves through direct market purchases.
The firm clarified, however, that it does not intend to completely abandon its mining operations. Cathedra will continue to generate Bitcoin through mining while also developing data centers to create more predictable cash flows, which will be used to buy more Bitcoin.
Financing Plans for Bitcoin Purchases
To finance the purchase of additional Bitcoin, Cathedra will consider issuing equity, debt options, or hybrid securities, similar to strategies employed by other firms like MicroStrategy and Metaplanet. The company also hinted at the possibility of borrowing against some of its existing assets to further fuel Bitcoin purchases.
The recent merger with computing infrastructure firm Kungsleden is expected to help Cathedra improve its Bitcoin per-share metrics, which aligns with its newly announced strategy.
Current Holdings and Market Position
At present, Cathedra holds 23 Bitcoin, valued at approximately $2.5 million, making it the 45th largest corporate Bitcoin holder according to Bitcoin Treasuries data. The company, listed on the TSX Venture Exchange in Canada, has a market capitalization nearing $20 million.
However, Cathedra has faced challenges in the market, with its share price plummeting 91% since its peak in October 2021. The stock is now trading at just $0.08 USD (0.059 CAD) as of recent data from Google Finance.
