Metaplanet Spends $160 Million to Prove Bitcoin Liquidity

Metaplanet made a bold move in the third quarter, selling 10,000 Bitcoin (BTC) for roughly $790 million at an average price of $79,000 per coin. The company then bought back 11,000 BTC for about $950 million, at an average of $86,400. The net result: Metaplanet ended the quarter with 1,000 more Bitcoin but $160 million less in cash. This transaction boosted the firm's total holdings to 44,000 BTC, securing its position as the world's third-largest corporate Bitcoin holder behind Strategy and Twenty One Capital.

CEO Simon Gerovich explained that the move was intended to prove Bitcoin's liquidity to rating agencies and credit investors. By demonstrating the ability to convert nearly a billion dollars of Bitcoin into yen without issues, Metaplanet aimed to strengthen its credit rating and financing prospects. However, critics question whether such a costly demonstration was necessary, given that selling Bitcoin is relatively straightforward through platforms like Coinbase.

An interesting tax angle emerged from the transaction. Because Metaplanet sold Bitcoin at a loss relative to its repurchase price, the company estimates a preliminary deferred tax asset of around $97 million. This potential tax benefit could soften the financial blow of the $160 million cash gap. Additionally, Metaplanet highlighted that the sold Bitcoin was worth more than its entire outstanding debt, though it did not use the proceeds to pay down any liabilities.

The transaction comes amid investor skepticism following a 17% stock drop in September due to concerns over executive stock options. The $160 million liquidity demonstration may have been an attempt to reassure investors, but its effectiveness remains uncertain. Comparatively, larger Bitcoin treasury giants like Strategy have not needed similar moves to prove liquidity, raising questions about Metaplanet's strategy and governance.