Summary
- Nakamoto’s $165 million loan from Kraken has exceeded the company’s market capitalization, the report said.
- A sharp drop in Bitcoin prices has reduced the value of its collateral, putting Nakamoto under pressure to repay the loan or provide additional Bitcoin collateral, the report said.
- Nakamoto has moved to extend its debt maturities to reduce its repayment burden, saying the change improved its financial flexibility and the stability of its collateral structure.
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Bitcoin treasury firm Nakamoto, which trades under the ticker DAT, owes crypto exchange Kraken more than the company’s entire market capitalization, CoinDesk reported on November 13.
Nakamoto currently has to repay a $165 million Tether loan to Kraken. That far exceeds the company’s market value of about $104 million.
The company borrowed against its Bitcoin holdings, but the value of that collateral has fallen sharply amid a recent plunge in Bitcoin prices, the report said.
As of late September, 3,030 of Nakamoto’s 4,283 Bitcoin, or about 70%, had been pledged to Kraken as collateral. The collateral was worth about $253 million at the time, but fell to about $208 million after Bitcoin dropped below $69,000.
If the collateral value declines further, Nakamoto will have to repay part of the loan or provide additional Bitcoin as collateral.
To ease the repayment burden, Nakamoto moved to extend its debt maturities. It extended by one year the maturity on $60 million due on December 4 to December 4, 2027. The remaining $105 million will still mature on June 30, 2027.
Tyler Evans, Nakamoto’s chief investment officer, said the revised agreement gives the company more flexibility in managing its funds and improves the stability of its collateral structure.
Uk Jin
