Japanese company Metaplanet has ambitious plans to use its large Bitcoin reserves for business acquisitions, potentially including a digital bank.
Bitcoin Accumulation and Strategy
CEO Simon Gerovich, speaking to the Financial Times, called the acquisition of Bitcoin a ‘Bitcoin gold rush’. The company, notably listed on the Tokyo Stock Exchange, aims to accumulate as much Bitcoin as quickly as possible, viewing this as leverage for expansion, seeking “escape velocity” to significantly lead others. This aligns with a strategy reminiscent of US firm MicroStrategy, which holds substantial Bitcoin reserves to act as a hedge against inflation.
Commenting on Bitcoin’s role, Gerovich likened the strategy to the gold rush era, stating, “We need to accumulate as much Bitcoin as we can… to get to a point where we’ve reached escape velocity and it just makes it very difficult for others to catch up.”
Metaplanet formally began accumulating Bitcoin in 2024. Current holdings stand at 15,555 BTC, with an objective to increase these holdings to over 210,000 by 2027, aiming to hold 1% of the total Bitcoin ever-mined. The company recently acquired 2,204 BTC for $237 million, reinforcing this stated goal.
Utilizing Bitcoin for Expansion
Phase two of Metaplanet’s plan involves leveraging its Bitcoin reserves to obtain financing, similar to securities or bonds. Gerovich expressed confidence that these acquisition targets will align with the company’s core strategy, targeting businesses with cash-generating capabilities.
Speaking at length to the Financial Times, he stated, “We’ll get cash that we can use to buy profitable businesses.” An idea that might include acquiring a digital bank in Japan is “maybe it is acquiring a digital bank in Japan and providing digital banking services that are superior to the services that retail now is getting.”
Cryptocurrency Collateral: Challenges and Alternatives
While crypto-backed lending remains uncommon in traditional finance, exploration is underway by some institutions. In April, a joint pilot program between Standard Chartered and OKX enabled institutions to use crypto and tokenized money market funds as collateral.
Referring to financing options, Gerovich ruled out issuing convertible debt, primarily due to potential repayment links to fluctuating Bitcoin share prices. However, he remains open to funding further growth through preferred shares. He explicitly stated, “I don’t want to have to pay back the money in three, four years’ time and have [repayment] linked to an arbitrary share price.”
Market Performance and Financials
Despite relatively limited reported current revenue – Metaplanet is notably a portfolio company holding Bitcoin and rarely records revenue from these holdings directly – the stock price has climbed over 345% this year, boosting its market capitalization above the $7 billion mark. This surge occurred despite minimal demonstrated operational income generation. Market optimism seems driven by speculation that the increasing Bitcoin reserves will be utilized for value-creating acquisitions as held Bitcoin’s price climbs towards their purchase costs.
Metaplanet CEO Simon Gerovich views the rapid accumulation of substantial Bitcoin reserves as a strategic move. He described the effort as a ‘Bitcoin gold rush’, a race against competitors to reach a point of significant market presence (“escape velocity”). Gerovich emphasized accumulating as much Bitcoin as possible to achieve a leading position, making further catching up unrealistic for others.
The company recently bolstered its reserves by acquiring an additional 2,204 BTC. Acquired for approximately $107,700 each, this expansion boosts its total holdings to 15,555 BTC with an average acquisition price of roughly $99,985 per coin. This follows an initial significant accumulation phase, estimated to have cost around $1 billion in early 2024.
