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Metaplanet, the Japanese hotelier turned bitcoin purchaser, has said it is in a race with rivals to snap up as much of the cryptocurrency as possible so it can leverage its holdings to buy cash-generating businesses.
Simon Gerovich, chief executive, told the Financial Times his company was in “a bitcoin gold rush” that could provide the launch pad to expand into areas such as digital financial services.
The group, currently the world’s fifth-largest corporate buyer of bitcoin, set out an ambitious plan last month to aggressively increase its stockpile from 15,555 bitcoin today to more than 210,000 by the end of 2027. The figure equates to about 1 per cent of all the bitcoin that will ever be made, and would be worth nearly $23bn at current prices.
“We think of it as a bitcoin gold rush,” Gerovich said. “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.
“Then we have phase two . . . when bitcoin, like securities or government bonds, can be deposited with banks and then they’ll provide very attractive financing against that asset,” he said. “We’ll get cash that we can use to buy profitable businesses, cash-flowing businesses.”
While crypto-backed lending exists in the crypto industry, accepting cryptocurrencies as collateral for loans is so far rare among traditional banks. This year, Standard Chartered began allowing institutional clients to use cryptocurrencies and tokenised money market funds as collateral for trading, but not for loans.
Gerovich, who was once a Goldman Sachs banker in Tokyo, has built Metaplanet’s stock market capitalisation to more than ¥1tn, or $7bn. Although it produces little revenue, its Tokyo-listed shares have surged more than 345 per cent this year, after it made a “strategic pivot” to become a so-called bitcoin treasury company in 2024.
Its aggressive bitcoin buying spree follows a trail blazed by Michael Saylor, the billionaire who turned US software group Strategy into a highly leveraged bitcoin investment vehicle by buying thousands of the cryptocurrency.
Strategy’s market valuation has hit $112bn, outstripping the value of the 597,000 bitcoin it has amassed, currently worth about $65bn. Investors are betting that, as Strategy issues more shares to buy more bitcoin, its ratio of bitcoin to shares will continue to rise. Metaplanet’s target of 210,000 bitcoin would make it the world’s second-largest corporate holder of the cryptocurrency behind Strategy.
An estimated 140 bitcoin treasury companies are now scattered around the world, while just over 1mn bitcoin are left to be mined of the 21mn that will be created. While supporters of bitcoin strategies argue that tightening availability will raise bitcoin’s price, Gerovich acknowledged the plan had limits.
“Four to six years is probably phase one in this Bitcoin accumulation phase, and then beyond that it becomes incrementally more difficult,” he said.
He stressed that it was “still really, really early days” in his plans to buy other businesses. But he added that “it would be better” if the target companies were aligned with Metaplanet’s current strategy, so “maybe it is acquiring a digital bank in Japan and providing digital banking services that are superior to the services which retail now is getting”.
Gerovich said he would “never” sell any bitcoin and would keep raising capital to buy more. He said he was open to issuing preferred shares, which typically offer an economic interest but no voting rights, as Strategy has done. But he drew the line at convertible debt, which Strategy has also used. “I don’t want to have to pay back the money in three, four years’ time and have whether or not we need to repay be linked to an arbitrary share price,” he said.
The concept of bitcoin treasury companies has been widely criticised, including by veteran short-seller Jim Chanos, who recently dismissed the use of terms such as “bitcoin yield” — which measures the change in a company’s bitcoin holdings per share over a given period — as “financial gibberish”.
Gerovich is scathing of such criticism and argues that new methods of valuation are needed to judge properly what he and others are doing.
“I encourage people to short our stock if they don’t believe in the story,” he said.
Additional reporting by Nikou Asgari in London