Metaplanet Secures $130 Million Loan to Buy Bitcoin Amid Market Uncertainties

Despite the ongoing volatility in the cryptocurrency market, Metaplanet has chosen to pursue an aggressive strategy for its latest Bitcoin purchase.

Key Takeaways

Metaplanet has borrowed $130 million using a Bitcoin-backed credit line.
This loan increases the company’s total borrowings to $230 million from a $500 million facility.
The funds will be used for acquiring more Bitcoin, enhancing its BTC income business, and potentially repurchasing shares.
Metaplanet currently faces an unrealized loss of nearly 20% on its existing Bitcoin holdings.
The firm plans to issue $135 million in Class B perpetual shares as part of its investment strategy.

On November 25, Metaplanet, which is listed in Tokyo, announced its decision to secure a new loan of $130 million from its Bitcoin-backed credit facility. This new borrowing brings the total amount the firm has borrowed to $230 million, from a credit line that has a total of $500 million. The company plans to use these funds to purchase additional Bitcoin, grow its BTC income business, and consider share repurchases. This move represents a leveraged strategy for the firm, even as it contends with an unrealized loss of nearly 20% on its existing Bitcoin holdings.

Metaplanet borrows $130m to buy Bitcoin as risks loom - 1
Metaplanet’s market cap and the net asset value of its Bitcoin holdings | Source: Metaplanet

The firm will calculate the interest on this loan in U.S. dollars, with the terms renewing daily. Additionally, Metaplanet has the flexibility to repay the loan whenever it chooses. The company’s income strategy also involves utilizing Bitcoin as collateral to engage in options trading.

Robot holding Bitcoin with vault in the background, symbolizing Metaplanet's reserves

Metaplanet Takes on a High-Risk, High-Reward Strategy

Getting loans to purchase Bitcoin presents a high-risk yet potentially rewarding opportunity. A decline in Bitcoin’s price can significantly affect leveraged buyers, possibly resulting in complete losses. Companies that adopt this approach, like Michael Saylor’s strategy, typically exhibit more volatility than Bitcoin itself.

Metaplanet is combining its leveraged approach with the sale of shares. On November 20, the company revealed plans to issue $135 million worth of Class B perpetual shares, a strategy that aligns with the approach taken for Bitcoin acquisitions by other firms. The average cost at which Metaplanet has purchased Bitcoin is $108,036, which is over 20% more than the current market price of $87,505.