Metaplanet has reported a substantial full-year loss of $605 million, attributed largely to the decline in value of its Bitcoin holdings. The Japanese firm revealed that its revenue stood at ¥8.9 billion, approximately $58 million, according to an earnings presentation. This financial performance has been significantly impacted by the depreciation of its 35,100 Bitcoin, collectively valued at $2.4 billion as of Monday.
Since embarking on its Bitcoin accumulation journey 21 months ago, Metaplanet has invested nearly $3.8 billion, resulting in an average purchase price of $107,000 per Bitcoin. Currently, this investment shows a daunting unrealized loss of about $1.4 billion, marking a 37% decline. In the last quarter of the fiscal year, the value of its Bitcoin holdings took a hit of ¥102 billion, translating to around $664 million.
Despite the grim overall financial picture, Metaplanet’s stock experienced a slight rise, reaching ¥326 on Monday. However, this comes after a staggering 62% decline over the past six months, echoing the drop in shares of similar firms.
The company traditionally generates revenue through premiums acquired from writing options. Notably, this income surged to ¥7.9 billion, or $51 million, significantly up from ¥691 million, or $4.5 million, in the previous year. Looking ahead, Metaplanet has forecasted an impressive 81% increase in full-year operating profit from this segment.
Modeling its strategy after Michael Saylor’s well-known approach, Metaplanet entered a competitive landscape following a surge of interest in digital assets. The company executed its largest Bitcoin purchases when prices surpassed $100,000, including significant buys of $630 million and $615 million in September and October, respectively.
To facilitate its Bitcoin acquisition, Metaplanet has employed various financial instruments, including common stock and preferred shares, termed MERCURY and MARS. The MERCURY product is notably described as a unique asset in Japan, aimed at providing a safeguard against potential downturns in the cryptocurrency market.
In an effort to bolster investor confidence amidst uncertainties, Metaplanet has initiated a cash reserve strategy to pre-emptively cover dividend obligations on its preferred shares. Meanwhile, a prediction market affiliated with Dastan has indicated a 22% probability that Metaplanet may need to sell its Bitcoin in the coming year, a figure that has fluctuated up to 35% in recent months.
As the digital asset landscape continues to evolve, Metaplanet faces critical challenges in maintaining its investment strategy while navigating the inherent volatility of cryptocurrency markets.
