What Actually Killed Small Businesses After The Pandemic

The mechanics of small business failure during this period followed predictable patterns. Companies ordered inventory at inflated prices during supply chain disruptions, paying premium freight costs to secure goods. When supply chains normalized and freight costs dropped 90 percent, businesses sat on warehouses full of overpriced inventory they had financed at high advance rates. Lenders demanded recapitalization when inventory values fell. Owners who had spent 12 years borrowing their way out of every problem suddenly had nowhere to turn.

Karpeles had studied Bitcoin before 2020, but watching profitable businesses destroyed by monetary policy crystallized the value proposition. “As someone who had spent hundreds, thousands of hours studying Bitcoin and really understanding the only solution to this problem was a better money, was a better form of currency, I just decided that I need to start looking for opportunities to go do something along those lines professionally.”

He found Sovereign on Bitcoinerjobs.com, initially joining as a consultant while maintaining his traditional finance position. By January 2025, after his first son was born, he committed fully. “There’s so much craziness going on in my life. Everything’s changing. I want to go do this full time,” he decided. When the founder faced health issues in May, Karpeles effectively took over running the company.

The Bitcoin Treasury Model That Isn’t Financial Engineering

Sovereign’s approach differs fundamentally from the digital asset treasury companies that have proliferated following MicroStrategy’s playbook. Those vehicles raise capital through convertible debt, private investments in public equity, and equity issuances to acquire crypto assets. They produce nothing themselves. They exist primarily as regulatory arbitrage vehicles allowing crypto insiders to exit positions at premium valuations while retail investors pay inflated prices.

While large companies like Coinbase know how to save in Bitcoin, Karpeles works with coffee shops, dentists, and precious metals dealers. Operating businesses with actual customers and revenue. They take five to 10 percent of profits and convert them to Bitcoin savings. No leverage schemes. No convertible debt. No going public to tap capital markets. “We’re not trying to go get a line of credit from some lender and tap the equity in their business and go buy a bunch of Bitcoin,” Karpeles explains.

The time horizon matters critically. “The value proposition really is five to 10 years down the road,” he says.

“This is a plan for 2030. Do we wish you started buying Bitcoin in 2020 and had it on your balance sheet? Yes, but you don’t. So let’s start now.”

Bitcoin provides businesses flexibility when revenue drops unexpectedly. A product recall. A tariff situation creating uncertainty. Seasonal fluctuations. “It buys you flexibility. It gives you time to extend the runway. You’re not constantly scrambling,” Karpeles notes. The reserve provides options beyond relying on income statements during difficult periods.

Volatility management differs entirely from leveraged treasury strategies. Karpeles starts by assessing owner conviction. How well do they understand Bitcoin? How comfortable do they feel with price fluctuations? Some owners want six months of expenses in cash. Others prefer 12 months. The most convicted might hold everything in Bitcoin and sell monthly to cover bills. “Over the long term, that’s actually the better decision, even with capital gains, even with everything else,” Karpeles observes.

Growth Without The Hype Machine

The company has facilitated six to potentially seven figures in Bitcoin purchases for individuals and small businesses. Services range from pure education for owners wanting to understand Bitcoin better, to full implementation including multi-sig setups and node operation, to helping businesses integrate Bitcoin into their go-to-market strategies.

Customer satisfaction remains high across the spectrum. “The companies we’ve worked with have all been incredibly happy with what we’re doing,” Karpeles says. Some want materials and conversations about Bitcoin fundamentals. Others want complete infrastructure: running their own node, proper multi-sig security, payment integration.

Employee benefit programs will expand Bitcoin adoption further. Block Rewards launched Bitcoin-based 401k plans in Canada with US expansion coming. Sound HSA plans to launch this month offering health savings accounts where employees can hold Bitcoin. “These are going to be HSA plans specifically where you can buy Bitcoin in it and you as an employee of a company, if your employer is offering it, will be able to sign up for these different programs,” Karpeles explains.

The Crisis Preparation That Actually Matters

Karpeles’s experience handling distressed businesses informs his crisis planning approach. Next time freight costs spike 90 percent, businesses with Bitcoin reserves have runway. Next time inventory prices surge unexpectedly, balance sheet cushions buy flexibility to adjust. “It provides just a whole host of other possibilities and stuff as you accrue purchasing power and increase power of your capital in your company down the road,” he notes.

The approach builds resilience rather than speculating on immediate price appreciation. Operating businesses need different risk management than treasury companies playing capital markets games. “A big part of why everyone at the company is doing what they’re doing is because we made those mistakes and we don’t want to see other people make those mistakes,” Karpeles explains.

His team wants to guide business owners past the pitfalls they encountered. The scams. The ways to lose Bitcoin through poor security. The temptation to sell too early. “Our goal is to get you set up correctly in the fastest amount of time possible and not cut any corners and make sure you don’t part with your sats like some of us did sadly back in the day.”

Bitcoin Treasuries Are Not The Only Form Of Corporate Adoption

Digital asset treasury companies trade at premiums to net asset value when sentiment runs positive and discounts when it reverses. They layer financial engineering atop crypto assets without necessarily creating genuine buying pressure. Multiple companies now trade below their underlying crypto holdings. The doom loop arrives when shareholders demand liquidation, when illiquid altcoin treasuries face redemption pressure, when PIPE lockups expire and investors flee.

Small businesses converting profits to Bitcoin savings represent the opposite dynamic. They produce actual value through goods and services. They earn revenue from customers. They save a portion in Bitcoin like individuals save for retirement. No convertible debt. No private placements. No regulatory arbitrage allowing crypto insiders to exit at premiums.

When the next crisis hits, businesses with adequate Bitcoin reserves won’t be calling workout officers like Karpeles used to be. They’ll have the flexibility and runway that proper savings provides. That represents genuine institutional adoption, not the financial alchemy of treasury companies trading at multiples to underlying assets while retail investors pay premiums for exposure available cheaper elsewhere.

The institutional adoption narrative has focused on the wrong metrics. Operating businesses building Bitcoin reserves over five to 10 year horizons matter more than leveraged vehicles designed to extract value from capital markets. One model builds resilience. The other amplifies systemic risk. When even crypto’s most aggressive leverage advocates warn current treasury strategies are unsustainable, perhaps the coffee shops and dentists have the right idea after all.