On December 10, Metaplanet’s President, Simon Gerovich discussed the company’s Bitcoin strategy at the Bitcoin MENA conference in Abu Dhabi, United Arab Emirates.
At the beginning of the session, Simon said “Thanks to Bitcoin! We are the best-performing stock after 4000 companies in Japan this year.”
Dylan LeClair, the Director of Bitcoin Strategy at Metaplanet, moderated the discussion. He mentioned that the current balance sheet value of Bitcoin is 8 times the entire market cap in April 2024.
Simon appreciated Michael Saylor for pioneering the concept of Bitcoin strategy as a treasury asset. Subsequently, the former shared that his company had some outstanding warrants that were part of the capital structure. They transferred those warrants to strategic investors who understood the BTC world.
The warrants had a value of $10 Million back then. The company offered a rights issue, where existing shareholders could subscribe to new shares. For every share the stakeholders owned, they could buy an additional share with a small discount at that time.
Consequently, the stocks rose rapidly as the shareholders in Japan found it lucrative. Initially, 14,000 Japanese shareholders subscribed to the rights issue, but now they have increased up to 50,000 shareholders. Simon aims to increase the number to 100k-500k shareholders by 2025.
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BTC Yield: New Key Performance Indicator
Dylan discussed how Metaplanet has adopted a new key performance indicator (KPI) – BTC Yield. Simon added that the KPI is a wonderful new metric that will redefine the way traditional analysts look at the companies. He added,
“The definition of BTC yield is the increase in BTC per share on a period-by-period basis. It’s a really good measure for – are you increasing the amount of BTC that the company owns on a per-share basis on the behalf of shareholders. We were the second company in the world after Microstrategy to adopt BTC yield.”
Simon shared that the company is considering ways to raise money and maximize the BTC yield. “Delusion is considered to be a bad thing. If your company has a $100 Million market cap, you are raising another $100 Million, and you are deluding everyone by 50%, but if that money can be used productively to buy BTC and BTC value goes up, it is a really good thing,” he said.
Simon discussed how MicroStrategy has made it possible for a debt investor to invest in Bitcoin USD and equity through convertible bonds. The convertible bonds are debt instruments and Metaplanet plans to introduce the concept in Japan.
“Currently, we have only sold equity and raised some straight bonds, but down the road, the idea is to do the same thing,” he said.
Metaplanet’s President, Simon shared how over $10 Trillion of debt issued by the Japanese government and corporations generates a negative yield for bond investors.
He aims to create an instrument to provide investors with downside protection and give them BTC returns.
With a presence in 4 Exchange Traded Funds (ETFs), Simon aims to get Metaplanet a share in several ETFs like MicroStrategy.
Simon Gerovich’s Take on Volatility
When asked about his take on BTC’s volatility and bond market, Simon expressed that he finds it boring when a low-volatile company like power, cement, or transportation company is relatively stable with a 5-10% volatility. The values barely fluctuate and hence, is not a good use of capital.
He encouraged people to invest in relatively volatile assets, arguing that even though they potentially go down, they also go up.
“There will be investors out there that wanna buy it, they can happily give up the guaranteed yield. So probably issue a zero percent coupon but in exchange, they want that embedded call option as it has tremendous value,” he said.
One of Metaplanet’s resolution items is to increase its authorized capital. The authorized share capital allows you to increase the capital and sell additional equity up to a certain threshold.
“That threshold in Japan can be 4 times your current paid up no. of shares. We’ll be able to issue over a billion dollars of equity in 2025. Our goal is to get to 10,000 BTC in 2025, and that would place us as one of the top 3-5 listed corporate holders of BTC in the world,” said Simon.
With an optimistic view of the growth of Bitcoin, Simon hopes that many corporations around the world will realize the benefits of owning Bitcoin as a treasury reserve asset.
