The world of Digital Asset Treasury (DATs) has entered a new era, after Strive (ASST) announced an all-stock deal to acquire Semler Scientific (SMLR) this week.

The deal marked the first merger of two publicly traded bitcoin treasuries, and according to a Wall Street banker familiar with the situation, this is just the start of a massive consolidation wave among the DATs.

The banker, who opted to remain anonymous, outlined three scenarios for how DATS may evolve.

Mergers to add more BTC

The first of the three paths is the DAT-to-DAT mergers.

Strive’s acquisition of Semler is the first clear example of unifying BTC holdings, boosting bitcoin per share, and establishing governance under one roof, the banker said.

When it closes, the deal will create a new company that will hold nearly 11,000 BTC after Strive’s simultaneous $675 million purchase of 5,885 coins.

It’s worth noting that Semler’s shares had been trading below the value of its bitcoin, effectively assigning negative value to its medical device business. For Strive, the acquisition consolidates balance sheets, adds BTC scale, and pushes forward a key company metric: Bitcoin per share.

“Strive’s merger announcement is accretive in bitcoin per share, meeting our short-term goal,” CEO Matt Cole wrote on X.

“We believe the combined power of the entities will give the combined company more ability to access the capital markets in a way that will drive increased bitcoin per share and accretion in a way neither could do on their own.”

With the bitcoin treasury market being saturated with many publicly traded companies, this strategy is likely to be one of the most efficient ways to grow for the DATs.

The cash-flow angle

The banker said the second path of evolution is acquiring cash-flowing businesses to offset dilution and fund ongoing BTC purchases.

Metaplanet, Japan’s largest bitcoin holder, has already said it will use its treasury to buy cash-generating businesses as part of its “phase two” strategy.

Metaplanet is also exploring the use of perpetual preferred stock, a financing strategy that Strategy (MSTR) has already employed, allowing it to buy bitcoin without diluting shareholders through at-the-market (ATM) common stock offerings.

No more SPACs

Third, is merging with legitimate businesses instead of using special-purpose acquisition companies (SPACs), according to the banker.

SPACs are shell firms designed to take companies public quickly, but the “de-SPAC” process can be messy, requiring shareholder votes, regulatory filings, and often suffering from investor redemptions. Making things more complex, to bridge funding gaps, many SPACs rely on PIPEs (private investments in public equity), which bring dilution, discounts and uncertainty.

For DATs, merging directly with a company that already has operations and governance avoids these pitfalls.

The evolution of DATs

The bottom line is that DATs are at a point where they need to evolve and get creative with their growth strategies.

In fact, other companies are already catching on to this trend. Recently, FRNT Financial (TSXV: FRNT), a digital asset investment bank, said it has entered into a consulting agreement with an undisclosed DAT with $100 million worth of digital assets in its balance sheet.

According to the deal terms, FRNT will help evaluate and structure lending opportunities for the company’s next growth phase.

The deals, such as the Strive-Semler merger, show digital asset treasury companies will need to scale through consolidation, buy profitable businesses, or align with established operators that bring legitimacy, ushering in the next phase of DATs’ evolution.

Read more: Semler Scientific Still Has Nearly 170% Upside After Strive Buyout Deal: Benchmark