Metaplanet is no longer content with just buying Bitcoin: it is now using it as collateral to borrow. The goal? To boost its balance sheet by reducing the number of shares outstanding while continuing to accumulate. A risky strategy, but one it embraces, inspired by the famous “Buy, Borrow, Die” model.
Metaplanet continues its Bitcoin Strategy, target: 210,000 BTC
While the BTC price has been stagnating below $120,000 since the start of summer, some investors are already declaring the end of the bull run and predicting a prolonged correction. Others, more optimistic, are hoping for a new surge toward an all-time high.
Among the most determined are “Bitcoin Treasuries” like Strategy, which are aggressively accumulating BTC. Just yesterday, Michael Saylor’s company announced the purchase of an additional 390 BTC, bringing its holdings to 640,808 BTC.
Metaplanet has earned its nickname as the “Japanese Strategy.” The company has just announced a massive and risky share buyback program, while reaffirming its ambition to reach 210,000 BTC by the end of 2027.
Excerpt from Metaplanet’s announcement
The board of directors has approved a buyback of up to 150 million shares (approximately 13% of the outstanding shares) for a maximum amount of 75 billion yen, or nearly $500 million.
Generally, this strategy supports the stock price and may signal that management considers the stock to be undervalued. It also improves financial indicators scrutinized by investors.
However, it also reduces available cash, and if financed by debt (as in the case of Metaplanet), it can increase the company’s financial risk.
Buy… Borrow… Die…
To finance these buybacks, Metaplanet’s management authorized a $500 million credit line, backed by its 30,823 BTC held in reserve (worth approximately $3.5 billion).
To finance this buyback, Metaplanet authorized the establishment of a $500 million credit line, backed by its 30,823 BTC held in reserve (approximately $3.5 billion).
This credit line allows the company, at its discretion, to quickly borrow funds backed by its BTC as collateral at any time. The funds raised may be used for additional BTC purchases, investments in BTC-generating revenue activities, or share buybacks.
By using its BTC as collateral to generate liquidity, Metaplanet is adopting a “Buy, Borrow, Die” approach on an enterprise scale: borrowing against a growing asset (in this case, Bitcoin), paying only the interest, and rolling over the debt as long as the valuation covers the risk.
If BTC continues to rise, Metaplanet could benefit from a snowball effect, unlocking ever more value without selling its BTC.
But if the price of Bitcoin were to fall or rise more slowly than the loan’s interest rate, Metaplanet could be forced to liquidate part of its reserves… potentially impacting the market and triggering a cascade of liquidations.
