Bitcoin Firms Need Cash To Keep Crypto Holdings

Bitcoin treasury companies are holding cash to meet financing obligations. Metaplanet sold 10,000 Bitcoin and later repurchased the coins at an average price about 9.3% higher. Strategy held $5.71 billion in cash and reserves for debt interest, preferred-stock dividends and other uses.

Metaplanet received ¥124.7 billion from the sale and spent ¥149.9 billion on the repurchase, a difference of about ¥25.2 billion. Based on the average repurchase price, replacing the 10,000 Bitcoin cost about ¥11.57 billion more than the sale proceeds, before transaction costs and potential taxes.

The Tokyo-listed company disclosed the transaction on Oct. 5 as part of an effort to improve its credit rating and access to financing. It did not use the sale proceeds to repay borrowings or bonds. Metaplanet held 44,000 Bitcoin at the end of September. The disclosure did not establish that a rating agency required the sale or that the company had secured cheaper financing.

Metaplanet’s June financial statement listed ¥67.49 billion in short-term borrowings and ¥8 billion in bonds payable within one year. Cash and deposits totaled ¥1.09 billion, with another ¥250 million held in USDC. The figures excluded Bitcoin and any financing obtained after June.

One zero-coupon bond has an April 23, 2027, redemption date and an early-redemption right. Metaplanet reported the full ¥8 billion principal in June, although the amount still outstanding requires confirmation. The obligation could be funded through new borrowing, securities issuance, cash or Bitcoin sales.

Strategy reported 848,000 Bitcoin as of Oct. 4 in an Oct. 5 filing. It held a $4.88 billion dedicated reserve and $833.4 million in separate dollar-denominated cash. The dedicated reserve is intended for preferred-stock dividends and debt interest. Other uses require board approval.

Between Sept. 28 and Oct. 4, Strategy used $142.5 million from the reserve for dividends and interest, spent $154.1 million repurchasing preferred shares and bought $13 million of Bitcoin. The company acquired its Bitcoin for about $63.97 billion.

Holders of $1.01 billion in Strategy notes can request cash repurchase on Sept. 15, 2027, although the notes mature in September 2028. Strategy’s June filing listed about $4.9 billion of notes with similar holder repurchase rights in 2028. Conversions, repurchases and new financing could reduce those obligations before the dates.

Share issuance is another funding constraint. Metaplanet’s June results showed its market value relative to net asset value below 1.0 for much of the period. Its policy generally avoids discretionary common-share issuance below that level, limiting fundraising that would increase ownership dilution.

Metaplanet’s revised allocation policy targets 85% to 90% of assets in Bitcoin and 10% to 15% in strategic investments, including income-producing securities. Its Net Interest Income Strategy may invest in preferred securities issued by other Bitcoin treasury companies. The investments could generate income for financing costs, while exposing Metaplanet to companies with similar funding risks.