September 2026

Follow the Cash Flow: How Digital Asset Companies Service Their Debt

Digital assets are often analyzed through the lens of price. Credit markets require a different lens: cash flow.

For an investor lending capital to a company, the central question is not whether Bitcoin rises, transaction volumes accelerate or artificial intelligence drives another wave of infrastructure investment. Those factors matter, but they are one step removed from the questions that ultimately determine creditworthiness: What generates the cash? How durable is it? What could disrupt it? And what resources are available if conditions deteriorate?

Those questions have become more interesting as the digital asset economy has matured. What was once a relatively narrow universe of miners and crypto-native businesses now encompasses financial platforms, payment networks, asset managers, data-center operators and companies holding substantial digital assets on their balance sheets.

The Digital Asset Debt Strategy ETF (DADS) portfolio reflects the widening economics of the digital asset industry, with issuers spanning several distinct cash-flow models, each with its own drivers and sensitivities. Understanding the portfolio therefore starts with understanding where the cash comes from.

One Market, Several Cash-Flow Engines

The term “digital asset company” increasingly obscures more than it explains. A Bitcoin miner converts electricity and computing power into digital assets. A data-center operator monetizes power capacity through customer contracts. A financial platform can earn transaction fees, interest income and other service revenue. Payment networks generate revenue from moving money, while asset managers collect fees on assets under management.

All can participate in the same broader digital economy. From a credit perspective, however, they are fundamentally different businesses. However, compelling the broader investment theme, debt service ultimately comes down to cash generation.

*Examples illustrate business models represented among DADS holdings as of 9/16/26 and are not a complete list. Holdings are subject to change. Click here, to view holdings.

The table highlights an important feature of digital asset credit: the same structural trend can produce very different sources of repayment. For investors, understanding the sector requires looking beyond broad classifications to the underlying cash-flow engines that ultimately support each business.

From Bitcoin Mining to Contracted Infrastructure

Bitcoin mining provides a useful starting point. At its core, mining converts capital, computing equipment and electricity into Bitcoin. The economics can change quickly as Bitcoin prices fluctuate, network difficulty adjusts and electricity costs move.

For creditors, production alone tells only part of the story. Two miners producing similar amounts of Bitcoin can have very different credit profiles depending on power costs, machine efficiency, liquidity and leverage. The more useful question is how resilient the cash margin embedded in that production remains under less favorable conditions.

The analysis changes again as some mining and digital infrastructure companies expand into artificial intelligence and high-performance computing. Many already control something increasingly valuable to AI developers: access to large amounts of power and the infrastructure required to deliver it. A mining site primarily monetizes that infrastructure by producing Bitcoin. A data center can monetize it through hosting arrangements or long-term customer contracts. The physical assets may overlap, but the cash-flow profiles can be quite different.

For a creditor, contracted revenue may provide greater visibility, but it introduces a new set of risks. Contract duration, counterparty quality, construction costs and execution become more important, as each can influence how reliably contracted revenue translates into cash available for debt service.

Beyond Crypto-Native Cash Flows

Other DADS issuers have business models that are less directly tied to Bitcoin economics. Financial platforms can draw revenue from trading, interest income and a range of services, while payment networks and asset managers may participate in tokenization and digital finance alongside established businesses built around transaction processing and asset-management fees. Digital asset treasury companies add another dimension, with substantial Bitcoin holdings potentially providing liquidity and balance-sheet flexibility, albeit with greater sensitivity to changes in asset prices. For creditors, this makes asset coverage, leverage and liquidity important, since the value available to support debt obligations can shift meaningfully with market conditions.

Taken together, these different business models may broaden the sources of cash flow and financial resources supporting issuers across the digital asset economy, reducing reliance on any single economic driver.

Three Sources of Repayment

A useful framework is to think about credit through three potential sources of repayment. The first is the business. The second is the balance sheet. When neither is sufficient, the third is access to capital markets.

Recurring operating cash flow is generally the strongest foundation for debt service. Balance-sheet liquidity may provide a second line of defense when operating conditions weaken. Capital markets can offer additional flexibility, but that flexibility may be least reliable precisely when an issuer needs it most. That framework brings the DADS investment thesis back to a surprisingly traditional place. The portfolio spans companies participating in different parts of the digital economy, but the fundamental credit questions remain unchanged.

What generates the cash, what could interrupt it, and how much protection exists if the original assumptions prove wrong?

New technologies continue to emerge, while the discipline of credit underwriting endures.

The Fund does not invest directly in digital assets; however, it will be subject to the risks associated with digital assets by virtue of this investment. The fund is subject to significant risks that are not typically present in other investments, including possible loss of principal.

Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 866-379-6199 or visit our website at www.DADSETF.com. Read the prospectus or summary prospectus carefully before investing.

As used herein, Digital Asset Debt Securities, or DAD Securities, means debt securities of issuers that are directly involved in digital asset-related activities, such as mining digital assets, holding digital assets in their corporate treasury or government treasury, and/or working on platforms to facilitate payment with, or the transfer of, digital assets.

Bitcoin & Digital Assets Risk. While the Fund will not directly invest in digital assets, it will be subject to the risks associated with bitcoin by virtue of its investments in DAD Securities that hold bitcoin or other digital assets. Investing in digital assets exposes investors to significant risks that are not typically present in other investments. These risks include the uncertainty surrounding new technology, limited evaluation due to bitcoin’s short trading history, and the potential decline in adoption and value over the long term. The extreme volatility of the price of bitcoin and other digital assets is also a risk factor.

Fixed Income Securities Risk. The prices of fixed income securities respond to economic developments, particularly interest rate changes, as well as to changes in an issuer’s credit rating or market perceptions about the creditworthiness of an issuer. In general, the market price of fixed income securities with longer maturities will increase or decrease more in response to changes in interest rates than shorter-term securities. Changes in government intervention may have adverse effects on investments, volatility, and illiquidity in debt markets. These changes could cause the Fund’s net asset value to fluctuate or make it more difficult for the Fund to accurately value its securities.

Derivatives Risk. Derivatives are financial instruments, such as futures contracts, options and swaps, that derive value from the underlying reference asset or assets, such as stocks, bonds, or funds (including ETFs), interest rates or indexes. The Fund’s investments in derivatives may pose risks in addition to, and greater than, those associated with directly investing in securities or other ordinary investments, including risk related to the market, imperfect correlation with underlying investments or the Fund’s other portfolio holdings, higher price volatility, lack of availability, counterparty risk, liquidity, valuation, and legal restrictions. The use of derivatives is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The use of derivatives may result in larger losses or smaller gains than directly investing in securities. When the Fund uses derivatives, there may be imperfect correlation between the value of the underlying instrument and the derivative, which may prevent the Fund from achieving its investment objective.

Convertible Securities Risk. The Fund will invest in convertible securities of companies which are preferred stocks or bonds that pay a fixed dividend or interest payment and are convertible into common stock or other equity interests at a specified price or conversion ratio during a specified period. Convertible securities generally have less potential for gain than common stocks. Also, convertible bonds generally pay less income than non-convertible bonds. Convertible securities tend to provide higher yields than common stocks. However, a higher yield may not protect investors against the risk of loss or adequately mitigate any loss associated with a decline in the price of a convertible security.

Digital Asset Treasury Companies Risk. Issuers whose business is holding bitcoin or other digital assets in their corporate treasury face unique risks as a result of holding digital assets in their corporate treasury. The speculative perception of digital assets may overshadow the fundamentals of such companies, leading to exaggerated price movements based on hype or fear. The value of the Fund’s investments in instruments that provide exposure to bitcoin corporate treasury companies – and therefore the value of an investment in the Fund – could decline significantly and without warning. If you are not prepared to accept significant and unexpected changes in the value of the Fund, you should not invest in the Fund.

Foreign and Emerging Markets Risks. Investments in foreign securities may involve risks such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in emerging markets involves different and greater risks, as these countries are substantially smaller, less liquid, and more volatile than securities markets in more developed markets.

Liquidity. The Fund may lose money or be prevented from earning capital gains if it cannot sell security at the time and price that is most beneficial to the Fund.

High Yield Bonds. High-yield bonds have a higher risk of default or other adverse credit events but have the potential to pay higher earnings over investment grade bonds. The higher risk of default, or the inability of the creditor to repay its debt, is the primary reason for the higher interest rates on high-yield bonds. Examples of other adverse credit events are interest rate risk (when interest rates rise, bond prices fall) and economic risk (the risk associated with downturns in the economy).

Credit Risk. A bond’s credit rating reflects the issuer’s ability to make timely payments of interest or principal—the lower the rating, the higher the risk of default. If the issuer’s financial strength deteriorates, the issuer’s rating may be lowered, and the bond’s value may decline.

Municipal Securities Risk. Funds that invest in municipal obligations of issuers will be affected by economic, political, or other events affecting municipal issuers, which may affect the Fund’s ability to acquire and dispose of municipal obligations at desirable yield and price levels.

Other Investment Companies Risk. The Fund will incur higher and duplicative expenses when it invests in ETFs and other investment companies. By investing in another investment company, the Fund becomes a shareholder of that investment company and bears its proportionate share of the fees and expenses of the other investment company. There is also the risk that the Fund may suffer losses due to the investment practices of the underlying funds as the Fund will be subject to substantially the same risks as those associated with the direct ownership of securities held by such investment companies. ETFs may be less liquid than other investments, and thus their share values are more volatile than the values of the investments they hold.

Mid/Small Capitalization. Investments made in small and mid-capitalization companies may be more volatile and less liquid than large company stocks due to limited resources or product lines and greater sensitivity to adverse economic conditions.

New Fund Risk. The Fund is a recently organized, giving prospective investors a limited track record on which to base their investment decision.

New Sub-Adviser Risk. Although the Sub-Adviser’s principals and the Fund’s portfolio managers have experience managing investments in the past, the Sub-Adviser has no experience managing investments for an ETF, which may limit the Sub-Adviser’s effectiveness.

Distributed by Foreside Fund Services, LLC.