Key Points
- Metaplanet Inc., a publicly-traded Japanese investment firm, has completed its planned 1 billion yen ($6.8 million) Bitcoin purchase, bringing its total holdings to 360.368 BTC.
- The company is issuing new stock acquisition rights to raise up to 10 billion yen ($68 million), with the majority of funds allocated for further Bitcoin purchases.
Strategic Shift to Bitcoin
On August 6, 2024, Metaplanet Inc. announced a significant strategic move towards Bitcoin adoption. The company’s board of directors resolved to conduct a gratis allotment of the 11th series of stock acquisition rights to all shareholders, aiming to raise up to 10 billion yen ($68 million).
Key details of the fundraising:
- Record date for shareholders: September 5, 2024
- Allotment date: September 6, 2024
- Exercise price: 555 yen per stock acquisition right
- Exercise period: September 6, 2024, to November 5, 2024
Allocation of Funds
Metaplanet outlined the following plan for the use of proceeds:
- Redemption of corporate bonds: 1 billion yen
- Purchase of Bitcoin: 8.5 billion yen
- Working capital: 500 million yen
The company emphasized that the majority of funds raised will be strategically allocated to purchasing Bitcoin. This decision is based on Bitcoin’s potential for long-term appreciation and its role as a hedge against currency depreciation, particularly the yen.
Rationale for Bitcoin Strategy
Metaplanet provided several reasons for its Bitcoin-focused strategy:
- Protection against Currency Depreciation: Bitcoin is seen as a safeguard against continuous yen depreciation and associated asset risks.
- Leveraging Market Opportunities: The company plans to engage in currency arbitrage and acquire Bitcoin using long-term yen-denominated debt, taking advantage of Japan’s low-interest-rate environment.
- Enhancing Shareholder Value: The strategy aims to increase earnings per share by growing Bitcoin holdings, potentially leading to significant appreciation over time.
- Tax Efficiency: Under Japan’s current tax system, holding Bitcoin can be more advantageous for companies than other assets, as unrealized gains on Bitcoin are not taxed if certain conditions are met.
Recent Bitcoin Acquisition
On August 20, 2024, Metaplanet confirmed the completion of its initial Bitcoin acquisition plan:
- Latest purchase: 57.273 BTC
- Purchase amount: 500 million yen ($3.4 million)
- Average purchase price: 8,730,117 yen per Bitcoin (approximately $59,400)
- Total Bitcoin holdings: 360.368 BTC
- Total investment: 3.45 billion yen ($23.5 million)
This recent purchase fulfills the 1 billion yen ($6.8 million) investment plan announced earlier in August.
Risk Acknowledgment
While emphasizing the potential benefits, Metaplanet also acknowledged the risks associated with its Bitcoin strategy, including:
- Price volatility
- Regulatory risks
- Security and operational risks
- Adoption and usage uncertainties
Market Impact and Future Outlook
Metaplanet’s investment has had a positive impact on its stock price. On the day of the August 20 announcement, the company’s stock traded 10.7% higher, reaching 1,192 yen in the morning session, outperforming the Nikkei 225 index’s 1.7% gain.
The company plans to hold Bitcoin as a long-term investment and will explore options to generate additional income, such as selling covered calls on a portion of its Bitcoin holdings.
As more traditional financial institutions and corporations enter the cryptocurrency space, investments like Metaplanet’s may become increasingly common, potentially driving further adoption and price appreciation of Bitcoin and other digital assets.
