Japanese investment firm Metaplanet has obtained a ¥1 billion ($6.8 million) loan from shareholder MMXX Ventures to acquire more Bitcoin. This move comes just two days after the firm announced plans to raise $70 million through a stock rights offering, with $58 million earmarked for Bitcoin investments.
Details of the Loan
The loan from MMXX Ventures carries a 0.1% annual interest rate and a six-month term starting on August 8. Metaplanet will repay the loan in a lump sum. If the entire $6.8 million is used to purchase Bitcoin, the firm would be able to buy approximately 118.5 Bitcoin at current market prices.
Strategic Move to Bolster Bitcoin Reserves
Metaplanet’s recent financial maneuvers reflect its strategy to adopt various capital market instruments to increase its Bitcoin holdings. This approach mirrors that of MicroStrategy, a firm known for its significant Bitcoin investments. The strategy aims to hedge against Japan’s increasing debt burden and the rapidly depreciating yen.
Company’s Shift and Performance
Before adopting its Bitcoin-focused strategy, Metaplanet struggled with financial instability. CEO Simon Gerovich described the company as a “zombie” entity, burdened with debt and an imbalanced balance sheet. At the Bitcoin 2024 conference, Gerovich highlighted Bitcoin as the “apex monetary asset” that could provide long-term stability and growth.
Since April 23, Metaplanet has purchased 246 Bitcoin, currently valued at approximately $13.95 million. The firm’s average purchase price is $65,145 per Bitcoin, translating to a 12.8% loss based on current prices. Despite this, the company’s stock price has surged 290% since announcing its Bitcoin strategy on April 9, now trading at $4.39 (¥643). However, it has dropped from its peak of $20.50 (¥3,000) on July 24, partly due to the cryptocurrency market’s “Black Monday” on August 5, which saw Bitcoin drop 10% in two hours.
Metaplanet’s aggressive Bitcoin accumulation indicates a long-term commitment to cryptocurrency as a financial hedge and growth strategy. The firm’s actions align with its goal of leveraging Bitcoin to navigate economic challenges and enhance its market position.
