Original author: Nancy, PANews

The Bitcoin flywheel of Metaplanet, Japan’s version of MicroStrategy, is slowing down.

At its recently concluded shareholders' meeting in Tokyo, Metaplanet attempted to boost market confidence through a capital increase and new financing methods. Trump's son, Eric Trump, even attended the event to offer his support. Despite the enthusiastic atmosphere, this massive "vote-making" effort did not seem to fully resonate with investors. The company is facing the dual challenges of a malfunctioning internal financing cycle and shrinking regulatory arbitrage opportunities. Whether this new financing structure can reshape its growth strategy remains to be seen.

Launching a financing of up to $3.8 billion, aiming to become the second largest Bitcoin treasury company

On September 1, Metaplanet President Simon Gerovich reviewed the company's transformation from a troubled hotel business to a Bitcoin vault company at a special shareholders' meeting on September 1, highlighting the company's achievements in the 16 months of operation as a Bitcoin reserve company and outlining the company's plan to purchase a total of 210,000 Bitcoins by 2027, accounting for 1% of the total supply.

According to the latest data from BitcoinTreasuries.net, Metaplanet currently holds 20,000 Bitcoins, with an average holding cost of $102,607. This makes it the sixth-largest publicly traded Bitcoin holder, behind only US-listed companies like Strategy, MARA, XXI, Bitcoin Standard Treasury Company, and Bullish. It is also the only Japanese-listed company to rank among the top 10 globally. At current prices, Metaplanet's market capitalization has exceeded $2 billion, and its Bitcoin yield as of September 2nd was nearly 7.5%.

To this end, Metaplanet has been approved to raise up to $3.8 billion to purchase additional Bitcoin. Over the next two years, the company will purchase 190,000 Bitcoins through its newly launched perpetual preferred stock product (Metaplanet Prefs). According to Simon, the preferred stock will not only serve as Metaplanet's core financing tool for acquiring additional Bitcoin, but will also establish a Bitcoin-backed yield curve with potential returns that could even exceed those of traditional fixed-income products in Japan. Given the limited returns offered by traditional markets, if Metaplanet successfully launches and markets this innovative product, it is expected to become the largest issuer of Bitcoin-backed fixed-income products in Asia.

Prior to this, Strategy pioneered the introduction of perpetual preferred stock, which typically does not carry voting rights but offers higher dividends than common stock. This model is uncommon in Japan, primarily due to factors such as conservative corporate financing structures, strict legal and regulatory requirements, and investors' preference for fixed income.

Metaplanet will reportedly issue two classes of preferred stock (with a maximum dividend of 6%) for investors with varying risk appetites. Class A preferred stock, similar to traditional fixed income, will offer a 5% yield; Class B, with an option to convert to common stock, carries a higher risk. Simon noted that these products offer four major advantages: first, they provide a new financing channel; second, they eliminate the need for frequent refinancing; third, they offer lower financing costs than most peers (thanks to Japan's long-term low interest rates); and fourth, by capping preferred stock issuance at 25% of net Bitcoin assets, they create a financial risk "safety valve" for the company.

At the meeting, Metaplanet shareholders also approved several resolutions, including increasing the authorized share count (revision of the authorized share count cap to 2,723,000,000 shares), holding shareholders' meetings at no fixed location (permitting online shareholder meetings), and establishing authorized share classes. Simon also announced Metaplanet's goal to become the world's second-largest Bitcoin holder, after Strategy, and stated that Metaplanet's per-share Bitcoin holdings have increased to 2,274% over the past year, far exceeding Strategy's 86%.

It is worth mentioning that Metaplanet strategic advisor Eric Trump also attended this special shareholders' meeting. He holds 3.3 million shares of Metaplanet, supports Metaplanet's Bitcoin strategy, and highly praised it, saying, "Simon is one of the most honest people I have ever met in my life. You have an outstanding leader and a great product, Bitcoin. This is a winning combination." In addition, Simon also disclosed that Fidelity and Charles Schwab are Metaplanet's largest shareholders, holding approximately 20% of the shares.

Metaplanet faces a double squeeze as its stock price plummets 60%

In contrast to the lively atmosphere of the shareholders' meeting, Metaplanet is experiencing the constraints of its flywheel strategy.

Despite Metaplanet's status as a leading Bitcoin reserve company, its new plan had a limited impact on its stock price, which rose only 0.83% after opening today, reflecting a relatively muted market reaction. In fact, since its all-time high of $15.35 in mid-May, its stock price has fallen approximately 60.2%. Meanwhile, the growth rate of its Bitcoin holdings has slowed significantly, increasing by only approximately 16.7% over the past month, compared to a 92.7% surge the month before.

Furthermore, Metaplanet's Bitcoin premium is narrowing. The premium, defined as the multiple of a company's market capitalization and its net asset value (NAV) of Bitcoin on its books, is a key metric for determining the viability of the "Bitcoin Vault Model." The smaller the premium, the less advantage a company has in raising capital through stock issuance to purchase Bitcoin, and the higher the cost of increasing its holdings. The larger the premium, the lower the cost of acquiring Bitcoin through stock issuance, making it more effective in expanding its Bitcoin holdings. Data shows that Metaplanet's NAV multiplier (market capitalization to net asset value) was as high as 8.5 at the end of May and has now fallen to just 1.9. This suggests that investor confidence in its Bitcoin holdings is significantly weakening.

But Metaplanet's challenges are not limited to the company level; the external environment is also changing.

Previously, one reason Japanese investors preferred buying crypto stocks over directly holding crypto assets was regulatory arbitrage. PANews previously reported that due to Japan's heavy tax burden on crypto assets and the more favorable tax regime for stock investments, investors were more inclined to invest in crypto stocks. However, recent developments indicate that the Financial Services Agency (FSA) of Japan plans to adjust the tax rate for crypto assets from a maximum progressive rate of 55% to a flat 20% rate, in line with stocks, in its 2026 tax revision. Once implemented, the tax gap between investors holding spot crypto and related stocks will significantly narrow, and the incentive to invest in stocks as a detour instead of holding cryptocurrencies will also be reduced.

Metaplanet is facing a double squeeze. On the one hand, its internal flywheel is stalling, with premiums narrowing, stock prices falling, Bitcoin holdings slowing, and financing models constrained. Metaplanet is hoping to attract overseas capital by issuing preferred shares, but whether this will be a lifeline remains uncertain. On the other hand, the erosion of external arbitrage and tax reforms have weakened the institutional appeal of crypto stocks, prompting potential investors to turn directly to spot trading or ETFs.