Crypto treasury companies switch to AI, but it doesn't help

The so-called Digital Asset Treasury model, where companies hold crypto as a primary strategy to attract investors, is rapidly losing popularity. With the crypto market underperforming, more and more companies are seeking refuge in artificial intelligence and other sectors. But so far, this transition has been working out poorly for their stock prices.

Pivot to AI Solves Nothing

Bloomberg reports: more than a dozen companies previously known for their crypto treasury strategy are announcing one after another a switch to AI data centres and related technologies. The hope is that such a repositioning restores investor confidence, but the practice is proving stubborn.

K Wave Media is a good example of this. The company initially focused on accumulating Bitcoin, but switched to developing data centres in May. Since then, its share price has plummeted by as much as 71%. Also Lixte Biotechnology Holdings and Alpha Compute, formerly known as AlphaTON Capital Corp. and focused on alternative cryptocurrencies, are seeing their shares fall. Both companies are trading roughly 33% lower since announcing their change of course.

Further Experiments: From Space Technology to Nuclear Reactors

The search for an alternative business model does not stop at AI alone. Some former crypto treasury companies are also exploring other sectors, including space technology and small modular nuclear reactors. These are striking choices for companies that, just a few months ago, were entirely focused on digital assets.

The question is whether these are strategically sound choices, or pure desperation to keep shareholders happy. For now, the latter seems to be the case. Investors are not buying it, and the declining sentiment around the DAT model is pushing stock prices further down, regardless of which direction a company takes. The combination of an underperforming crypto market and the lack of a convincing new narrative makes it difficult to turn the tide. As Coinbase CEO Brian Armstrong previously stated in an earlier comment, crypto and AI are linked, but that does not mean every combination of the two automatically yields success.