Company's Aggressive Bitcoin Accumulation Strategy Continues
Metaplanet has announced plans to utilize its existing Bitcoin holdings as collateral to secure a substantial $130 million loan. This financial maneuver is intended to facilitate additional Bitcoin acquisitions, demonstrating the company's continued commitment to its aggressive accumulation strategy. Following this announcement, Metaplanet's shares, which are listed on the Tokyo Stock Exchange, experienced an increase of more than 2%.
This new loan brings the total amount borrowed under Metaplanet's $500 million Bitcoin-backed credit facility to $230 million. The company executed this latest borrowing on November 21. The identity of the lender has not been disclosed at the counterparty's request.
The interest on this loan is calculated by referencing a U.S. dollar interest rate, augmented by a specific spread. The loan term automatically renews on a daily basis, and the company retains the discretion to repay the funds at any time.
Metaplanet has indicated that the funds obtained will be allocated to its Bitcoin Income Generation business. This segment of the business is designed to use Bitcoin as collateral for selling options, thereby earning premium income. The company currently holds a significant amount of Bitcoin, with its reserves totaling 30,823 Bitcoin, valued at approximately $2.7 billion based on current market prices.
Strategic Pivot and Long-Term Acquisition Goals
Metaplanet, a company that some investors have referred to as "Asia's Strategy," made a strategic pivot in 2024. It shifted its focus away from its foundational hotel and technology businesses to commence the acquisition of Bitcoin. The company has set an ambitious target to acquire 210,000 Bitcoin by the year 2027, which represents 1% of the total cryptocurrency's supply.
The recently secured loan is backed by Metaplanet's substantial Bitcoin holdings. As of October 31, the company's Bitcoin reserves were valued at approximately $3.5 billion. This substantial collateral provides significant headroom, even in scenarios of severe market volatility. Company management has affirmed that they only draw funds within conservative collateral buffers, emphasizing risk management.
Market Context and Share Performance
The timing of this loan issuance comes during a period when cryptocurrency prices have experienced a downturn, placing pressure on digital asset treasuries. A notable plunge in digital asset prices during the current quarter has amplified concerns among skeptics regarding the treasury strategy that was initially pioneered in 2020.
Bitcoin's price has recently seen a significant decline, now sitting 30% below its October record high of $126,080. The digital asset was recently trading near $87,516, representing a 1% decrease over a 24-hour period, following a rebound from a low of approximately $81,000 experienced last week.
Metaplanet's shares saw a rise of 2.24% to 365 yen immediately after the loan announcement. However, the share price remains more than 80% below its record high achieved in June. Year-to-date, Metaplanet shares have shown resilience, increasing by nearly 5%. This performance stands in contrast to other digital asset treasuries that have experienced steeper declines as the broader cryptocurrency market corrects from its previous peaks.