Metaplanet Inc. has taken out $100 million in loans against its Bitcoin holdings, hoping to use that money to buy more Bitcoin and underpin operations.
The lender’s identity remains undisclosed, though the loan carries a floating interest rate tied to US dollar benchmarks plus an additional spread.
Metaplanet has just tapped a $100 million loan from their credit facility.
This represents about 3% of their Bitcoin value.
I’d imagine it is to prepare for share buybacks at a potential sub 1.0 mNAV…
…or they’re looking to BUY THE DIP!
The company also has a ¥75 billion share buyback plan—about $500 million in total. Based on reports, the management believes borrowing against Bitcoin allows the firm to strengthen its position without selling existing assets.
A sharp drop in Bitcoin’s price could reduce the value of the collateral, forcing the company to add more collateral or unwind part of its position.
Reports also brought to spotlight how the market value of Metaplanet sometimes retreated below the valuation of the Bitcoin it holds, indicating weaker investor sentiment.
Still, the company continues to explore income-producing plans like Bitcoin options trading to generate returns that are beyond price appreciation.
Market observers are now focusing on how fast the company will put to use the borrowed funds to purchase additional crypto and whether more borrowing will follow.
For now, this $100 million loan is a bold demonstration of Metaplanet’s deep conviction in Bitcoin and possibly sets an example for other firms exploring crypto-backed financing.
Featured image from Unsplash, chart from TradingView
