Days to Cover: A New Metric for Assessing Bitcoin Accumulation by Public Companies

Days to Cover: A New Metric for Assessing Bitcoin Accumulation by Public Companies

Introduction

In the rapidly evolving Bitcoin ecosystem, a new metric called "Days to Cover" has emerged as a powerful tool for analyzing how aggressively public companies are accumulating Bitcoin. This metric provides insights beyond simple holdings by contextualizing accumulation relative to production rates.

Understanding Days to Cover

Definition
Days to Cover measures how many days of Bitcoin network production would be required to match a company's current accumulation rate. It's calculated as:

Days to Cover = (Company's BTC Holdings) / (Daily BTC Production × Company's Share of Daily Production)

Where:
Daily BTC production is currently ~900 BTC/day (post2024 halving)
Company's share is their accumulation as a percentage of daily production

Key Benefits

1. Normalizes for company size: Allows comparison between large and small holders
2. Reveals accumulation intensity: Shows how aggressively a company is stacking relative to network output

3. Provides forwardlooking insight: Helps assess potential future impact on supply

   Top BitcoinAccumulating Companies by Days to Cover

   1. MicroStrategy (MSTR)
      BTC Holdings: 214,246 BTC (as of June 2024)
      Daily Accumulation Rate: ~1,000 BTC/month (~33 BTC/day)
      Days to Cover: ~6,493 days (~17.8 years)
      Analysis: The undisputed leader in corporate BTC holdings, MicroStrategy's accumulation would take nearly 18 years of current network production to match at their current rate.

   2. Marathon Digital (MARA)
      BTC Holdings: 17,631 BTC
      Daily Accumulation: Through mining (~2830 BTC/day)
      Days to Cover: ~588 days (~1.6 years)
      Analysis: As a pureplay miner, Marathon's holdings represent about 1.6 years of their current production share.

   3. Riot Platforms (RIOT)
      BTC Holdings: 9,109 BTC
      Daily Accumulation: Mining (~14 BTC/day)
      Days to Cover: ~651 days (~1.8 years)
      Note: Recently expanded mining capacity suggests this metric may decrease.

   4. Tesla (TSLA)
      BTC Holdings: 10,725 BTC
      Daily Accumulation: Intermittent purchases (currently ~0/day)
      Days to Cover: N/A (not currently accumulating)
      Context: Tesla's metric is less meaningful as they aren't consistently accumulating.

   5. Block (SQ)
      BTC Holdings: 8,038 BTC
      Daily Accumulation: ~$10M monthly (~5 BTC/day at $60k/BTC)
      Days to Cover: ~1,607 days (~4.4 years)
      Strategy: Dollarcost averaging approach shows moderate accumulation intensity.

   Comparative Analysis

Implications for the Bitcoin Market

1. Supply Impact: Companies with high Days to Cover are effectively removing significant portions of new supply from the market.

2. Price Support: Aggressive accumulators create consistent buyside pressure.

3. Network Security: Miner holdings with high Days to Cover may indicate stronger longterm commitment to network security.

4. Market Dynamics: High Days to Cover suggests these companies expect continued appreciation.

   Limitations of the Metric

5. Doesn't account for potential selling

6. Mining companies' production can fluctuate

7. Some companies (like Tesla) have inconsistent accumulation patterns

8. Doesn't consider derivative positions or other crypto holdings

   Conclusion

The Days to Cover metric reveals that MicroStrategy stands in a league of its own in terms of Bitcoin accumulation intensity, with its holdings representing nearly 18 years worth of current network production at its accumulation rate. Among miners, Marathon and Riot show similar profiles, while Block's dollarcost averaging strategy results in a more moderate but still significant accumulation profile.

This metric provides investors with a valuable new lens through which to evaluate corporate Bitcoin strategies and their potential impact on the broader market.