Metaplanet’s Ambitious bitcoin Acquisition Strategy: Aiming for Market Dominance

Metaplanet’s bitcoin Rush

Metaplanet, a Japanese hotel chain that has transitioned into the cryptocurrency market, is actively competing with other firms to acquire substantial amounts of bitcoin. The company aims to utilize its cryptocurrency holdings to invest in businesses that generate cash flow.

CEO’s Vision for Expansion

Simon Gerovich, the CEO of Metaplanet, described the current situation as a “bitcoin gold rush,” which he believes could serve as a springboard for the company to venture into digital financial services. The firm, now recognized as the fifth-largest corporate bitcoin buyer globally, has set an ambitious goal to increase its bitcoin reserves from 15,555 to over 210,000 by the end of 2027. This target represents approximately 1% of the total bitcoin that will ever be mined, potentially valued at nearly $23 billion based on current market prices.

Strategic Accumulation of bitcoin

Gerovich emphasized the importance of accumulating bitcoin to achieve a competitive edge, stating, “We need to gather as much bitcoin as possible to reach a point of escape velocity, making it challenging for competitors to catch up.” He outlined a two-phase strategy, where the second phase involves using bitcoin as collateral for loans from banks, similar to securities or government bonds. This would enable Metaplanet to secure financing for acquiring profitable businesses.

Traditional Banks and Crypto Lending

While crypto-backed lending is gaining traction within the cryptocurrency sector, traditional banks have been slow to adopt this practice. Recently, Standard Chartered began allowing institutional clients to use cryptocurrencies as collateral for trading, but not for loans.

Metaplanet’s Market Performance

Gerovich, who previously worked at Goldman Sachs in Tokyo, has successfully increased Metaplanet’s market capitalization to over ¥1 trillion (approximately $7 billion). Despite generating minimal revenue, the company’s shares listed in Tokyo have surged by more than 345% this year, following a strategic pivot to become a bitcoin treasury company in 2024.

Following in the Footsteps of Industry Leaders

Metaplanet’s aggressive bitcoin acquisition strategy mirrors that of Michael Saylor, the billionaire who transformed his software company, Strategy, into a heavily leveraged bitcoin investment entity. Strategy’s market valuation has soared to $112 billion, surpassing the value of its 597,000 bitcoin holdings, which are currently worth around $65 billion. Investors are optimistic that as Strategy continues to issue shares for bitcoin purchases, its bitcoin-to-share ratio will improve. If Metaplanet achieves its goal of 210,000 bitcoin, it would become the second-largest corporate holder of the cryptocurrency, following Strategy.

The Global Landscape of bitcoin Treasury Companies

Currently, there are approximately 140 bitcoin treasury companies worldwide, with just over 1 million bitcoin remaining to be mined out of the total 21 million that will ever exist. Proponents of bitcoin strategies argue that the limited supply will drive up prices, although Gerovich acknowledged that there are challenges ahead. He noted, “The first four to six years will be crucial for our bitcoin accumulation, and beyond that, it will become increasingly difficult.”

Future Business Acquisitions

Gerovich indicated that while it is still early in the process of acquiring other businesses, he prefers targets that align with Metaplanet’s current strategy. This could involve acquiring a digital bank in Japan to offer enhanced digital banking services to consumers.

Commitment to bitcoin Holdings

Gerovich stated that he has no intention of selling any bitcoin and plans to continue raising capital for further acquisitions. He expressed openness to issuing preferred shares, which typically provide economic benefits without voting rights, similar to Strategy’s approach. However, he ruled out the possibility of using convertible debt, citing concerns about repayment linked to fluctuating share prices.

Criticism and Defense of bitcoin Strategies

The concept of bitcoin treasury companies has faced criticism, including from veteran short-seller Jim Chanos, who dismissed terms like “bitcoin yield” as nonsensical. In response, Gerovich defended his approach, arguing that new valuation methods are necessary to accurately assess the activities of companies like his. He encouraged skeptics to short Metaplanet’s stock if they disagree with its strategy.

Additional reporting by Nikou Asgari in London.

Disclaimer: This article is provided for informational purposes only and does not constitute financial advice. Readers are encouraged to conduct their own research before making any investment decisions.