- Metaplanet secures a $130M Bitcoin-backed loan, increasing total borrowing to $230M.
- Bitcoin-backed credit and preferred shares fuel Metaplanet’s Bitcoin acquisition strategy.
- Despite unrealized losses, Metaplanet continues to “HODL” Bitcoin, confident in long-term gains.
Metaplanet, a Tokyo-listed Bitcoin treasury company, has secured a $130 million loan backed by Bitcoin. This loan is part of a $500 million credit line that allows the company to use its Bitcoin holdings as collateral for short-term liquidity. The company plans to use the funds to boost Bitcoin purchases and enhance its income-generation strategies.
The loan was executed on Friday, as revealed by Metaplanet on Tuesday. This brings the total amount borrowed from the credit facility to $230 million, up from $100 million pulled in late October. The facility provides the company access to liquidity while utilizing its Bitcoin supplies.
Metaplanet’s Bitcoin-Backed Borrowing Strategy
Metaplanet’s strategy is to borrow against its reserves in Bitcoin. This strategy allows the company flexibility to increase its stake in Bitcoin without having to issue new stock. However, it also exposes Metaplanet to risks in the event that Bitcoin’s price plunges significantly. The company recognized this risk but is confident in its ability to manage it.
The company’s holdings of Bitcoin are so large as to provide a buffer against price changes. The firm believes that it can retain enough collateral headroom despite market volatility. The company said that the size of its holdings in relation to the amount of the loan helps offset risks.
Also Read: Metaplanet To Raise $150M and Expand Bitcoin Treasury
The company is taking a two-pronged strategy to fund their Bitcoin acquisition strategy. The bitcoin-backed credit facility enables a flexible form of borrowing, whereas the issue of new Class B perpetual preferred shares is issued to bring in more long-term capital. Investors who buy these shares will receive fixed payouts and be able to convert them into regular stock in the future.
Staying Committed to Bitcoin Amid Market Volatility
These two funding methods intend to support Metaplanet’s continued accumulation of Bitcoin, even during periods where it is suffering unrealized losses. BitcoinTreasuries.NET data shows that the company is currently experiencing a 20% unrealized loss on the Bitcoin investments. The company bought the Bitcoin at an average of $108,036, although the current price is around $87,645.
Despite the unrealized loss, the company retains its Bitcoin. The company is committed to following its long-term strategy for Bitcoin. Bitcoin strategy director Dylan LeClair mentioned that the company is “HODLing” its Bitcoin, which signals the company’s intention to hold back its assets from market volatility.
Community member Ragnar linked the loan’s execution date to Bitcoin’s drop to $82,000 on Friday. It’s highly probable they bought the Bitcoin dip. I’m a fan of the stock, Ragnar commented.
Also Read: Bitcoin Whale Growth Signals Price Recovery Despite Selloff
