Metaplanet Invests in Preferred Securities of Bitcoin-Holding Companies｜New Strategy for Profit Generation Introduced

Key Points of This Article

• Metaplanet invests in preferred securities of Bitcoin-holding companies
• The new strategy aims to reduce capital costs

Investment in Preferred Securities

On the 5th of this month, Metaplanet announced the introduction of a new "Net Interest Income Strategy" that involves investing in assets including preferred securities issued by Bitcoin-holding companies (Bitcoin Treasury companies) and other overseas Bitcoin-related securities, aiming to generate profits from the difference between procurement costs and interest income. The funding will come from means that do not dilute ordinary shareholders, such as the company's bonds (BitBonds), Bitcoin-backed credit lines, and its own perpetual preferred stock.

In other words, the strategy involves using funds raised through the issuance of bonds or preferred stock to purchase preferred securities issued by Bitcoin-holding companies, with the aim of generating revenue from the difference between the yield and procurement costs.

Regarding this strategy, Simon Gerovich, CEO of Metaplanet, explained that the goal is to create a continuous revenue source and effectively reduce capital costs, supporting the next stage of growth. The company states that this revenue will contribute to securing funds for dividends on preferred stock, interest payments on bonds, and additional Bitcoin acquisitions.

Investments will be executed within a strategic investment framework of approximately 10% to 15% of total assets, based on the judgment that expected returns will sufficiently exceed related procurement costs with a sufficient margin. Physical Bitcoin will continue to be held as a core asset, maintaining approximately 85% to 90% of total assets, while investment target assets will be managed separately from Bitcoin, which is based on a long-term holding policy.

On the same day, the capital allocation policy was revised, allocating the strategic investment framework to three uses: M&A aimed at building a financial platform, investments in assets expected to generate stable revenue, and investment funds for asset management business.

Acquisitions and Sales in Q3

On the same day, Metaplanet announced that it had acquired a net total of 1,000 BTC in the third quarter ending December (from July to September), bringing its holdings to 44,000 BTC as of September 30. During the same quarter, it sold 10,000 BTC while purchasing 11,000 BTC.

The sales were aimed at demonstrating that the company, which is seeking a credit rating, can actually liquidate Bitcoin if necessary, and the sale amount exceeds the total principal balance of interest-bearing liabilities, although no repayments or redemptions have been made.

CEO Gerovich stated on X that the questions posed by rating agencies and credit investors to Bitcoin companies include whether they can liquidate Bitcoin to fulfill their debts and whether they have the actual intention to do so, and he indicated that this transaction serves as an answer to those questions.

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