Asia’s largest publicly traded Bitcoin company, Metaplanet, has just reported a staggering $170 million loss. The most striking thing isn’t the size of the loss, but that it sold 10,000 Bitcoin in the third quarter to prove to rating agencies that it could repay its debts.
According to Cointelegraph and Metaplanet’s latest financial report, the Tokyo-listed company recorded a net loss of 27.16 billion yen (about $170 million) in the first nine months of this year. That marks a reversal from a profit of 13.53 billion yen over the same period last year.
Two factors drove the massive loss. First, the company incurred an 8.04 billion yen unrealized loss on the book value of its Bitcoin holdings. Second, it realized a loss of 19.17 billion yen (about $120 million) from selling 10,000 Bitcoin.
To demonstrate its liquidity to rating agencies and bond investors, the company sold 10,000 Bitcoin during the quarter for 124.7 billion yen. It then spent 149.9 billion yen to buy 11,000 Bitcoin, at an average repurchase cost a full 9.3% higher. The company openly stated that the exercise was intended to prove that its Bitcoin holdings could be readily converted to cash to repay debt.
However, the cost of buying Bitcoin with high leverage is quickly becoming apparent. By the end of September, Metaplanet’s credit facilities had surged to $649 million, up from $414 million at the end of June. Quarterly interest expenses rose 56% quarter over quarter to 1.36 billion yen (about $8.5 million). Short-term borrowings and bonds payable totaled 110.5 billion yen (about $691 million). The company also sharply cut its full-year revenue forecast from 16 billion yen to 6.5 billion yen.
Bitcoin (BTC) recently fell below the $70,000 mark and is currently fluctuating around $66,814 on Binance spot markets. Markets have traditionally treated corporate Bitcoin hoarding as an unwavering source of buying demand. But these results reveal the vulnerabilities of the MicroStrategy model. When Bitcoin prices weaken, the heavy interest burden from financing directly eats into companies’ cash flow.
More difficult pressures lie ahead. MSCI has confirmed that it will remove MicroStrategy and Metaplanet from its global equity indexes after the market close on November 30. JPMorgan estimates that MicroStrategy alone could face around $2.8 billion in selling by passive funds. If companies are forced to sell spot holdings to meet margin calls under pressure from ratings and financing constraints, that could directly hit the spot market.
My take: Keep a close eye on corporate financing spreads and large on-chain transfers around the November 30 MSCI index rebalancing. If BTC cannot hold above $68,000 by the end of November, soaring debt costs could force companies holding Bitcoin to shift from active buying to passive deleveraging. This will be a key test of whether the corporate reserve narrative can hold up.
Personal views and information summary only—not investment advice. DYOR.
$BTC #Bitcoin
According to Cointelegraph and Metaplanet’s latest financial report, the Tokyo-listed company recorded a net loss of 27.16 billion yen (about $170 million) in the first nine months of this year. That marks a reversal from a profit of 13.53 billion yen over the same period last year.
Two factors drove the massive loss. First, the company incurred an 8.04 billion yen unrealized loss on the book value of its Bitcoin holdings. Second, it realized a loss of 19.17 billion yen (about $120 million) from selling 10,000 Bitcoin.
To demonstrate its liquidity to rating agencies and bond investors, the company sold 10,000 Bitcoin during the quarter for 124.7 billion yen. It then spent 149.9 billion yen to buy 11,000 Bitcoin, at an average repurchase cost a full 9.3% higher. The company openly stated that the exercise was intended to prove that its Bitcoin holdings could be readily converted to cash to repay debt.
However, the cost of buying Bitcoin with high leverage is quickly becoming apparent. By the end of September, Metaplanet’s credit facilities had surged to $649 million, up from $414 million at the end of June. Quarterly interest expenses rose 56% quarter over quarter to 1.36 billion yen (about $8.5 million). Short-term borrowings and bonds payable totaled 110.5 billion yen (about $691 million). The company also sharply cut its full-year revenue forecast from 16 billion yen to 6.5 billion yen.
Bitcoin (BTC) recently fell below the $70,000 mark and is currently fluctuating around $66,814 on Binance spot markets. Markets have traditionally treated corporate Bitcoin hoarding as an unwavering source of buying demand. But these results reveal the vulnerabilities of the MicroStrategy model. When Bitcoin prices weaken, the heavy interest burden from financing directly eats into companies’ cash flow.
More difficult pressures lie ahead. MSCI has confirmed that it will remove MicroStrategy and Metaplanet from its global equity indexes after the market close on November 30. JPMorgan estimates that MicroStrategy alone could face around $2.8 billion in selling by passive funds. If companies are forced to sell spot holdings to meet margin calls under pressure from ratings and financing constraints, that could directly hit the spot market.
My take: Keep a close eye on corporate financing spreads and large on-chain transfers around the November 30 MSCI index rebalancing. If BTC cannot hold above $68,000 by the end of November, soaring debt costs could force companies holding Bitcoin to shift from active buying to passive deleveraging. This will be a key test of whether the corporate reserve narrative can hold up.
Personal views and information summary only—not investment advice. DYOR.
$BTC #Bitcoin
