Why Spanish Vanadi Coffee’s $1.1B Bitcoin Bet Will ‘Likely Fail’

Vanadi Coffee, a struggling Spanish café chain operating in just six locations, has turned to Bitcoin as a potential lifeline, joining a trend among financially strained firms hoping to find a fix.

Shareholders unanimously approved plans to accumulate up to $1.17 billion (EUR$1 billion) in the crypto, despite posting losses totaling $3.9 million last year, the company’s announcement on Sunday reads.

Despite revenue growth, Vanadi remains cash-strapped, posting deepening annual losses, struggling with negative operating cash flow and thin liquidity, according to data from BME Growth, a multilateral trading facility operated by Spain’s stock exchange group, Bolsas y Mercados Españoles.

In any case, the coffee chain seeks to “redefine” its business model and use Bitcoin as its “primary reserve asset, accumulating large amounts as part of its treasury strategy,” a rough translation of its filing in Spanish reads.

Vanadi Coffee bought 20 more BTC at $109,880 each, totaling 54 BTC at the end of June. The assets are being held in custody with Bit2Me, a local crypto exchange registered with the Bank of Spain.

With the change, its board is allowed to negotiate convertible debt financing in a bid to mirror Michael Saylor’s playbook, though without any meaningful revenue stream.

“Most new ‘bitcoin treasury companies’ are gimmicks, and will likely fail,” Andrew Bailey, senior fellow at the Bitcoin Policy Institute, told Decrypt.

“Though there are diseconomies of scale that privilege new entrants, a badly run business doesn’t become a good one just because it is acquiring sound money.”

Directors received authorization to increase capital by up to 50% and exclude preemptive subscription rights for 20% of the new shares, provisions that could significantly dilute the interests of existing shareholders.

Vanadi Coffee will pay up to 5% in commissions to intermediaries, including its own board members, for capital raised under its financing strategy.

‘Gimmick’ tier 

The pivot follows a similar move from Australian biotech firm Opyl last week, which had just $42,880 in cash at the end of March, turning to Bitcoin as an ostensibly last-ditch treasury strategy after burning through over $174,200 in the quarter.

“Bitcoin has long appeared strange and risky to MBA types who benefit from extant financial systems,” Bailey noted. “Their minds will remain closed to bitcoin, I suspect, for a good while longer, and the existence of small bitcoin treasury companies is unlikely to change much.”

Compared to Strategy, which targets institutional fixed-income investors with billions in assets, Vanadi represents what Bailey calls the “gimmick” tier of Bitcoin treasury companies. 

While it’s easier to “triple holdings” when starting with “just two Bitcoin,” the underlying business problems remain, Bailey explained.

“Strategy is different in kind from these smaller shops, though, and is stalking bigger prey: the trillions invested in highly liquid fixed income products,” Bailey said.

Vanadi did not immediately return Decrypt’s request for comment.

Edited by Sebastian Sinclair