Approximately 70% of Nakamoto’s Bitcoin reserves have been pledged to Kraken as loan collateral. The company purchased these assets at an average price of nearly $118,000 per BTC, while Bitcoin has since fallen below $69,000.
David Bailey’s Bitcoin treasury company, Nakamoto (NAKA), is facing a significant debt burden, with its outstanding obligations to Kraken exceeding the company’s entire stock market valuation. Despite the financial pressure, Nakamoto has managed to secure an extension on part of its repayment schedule, giving it another year to address its liabilities.
Nakamoto’s core strategy revolves around accumulating and holding Bitcoin. The company owes Kraken 165 million USDT, Tether’s dollar-pegged stablecoin, through a loan secured exclusively by its Bitcoin reserves. Its shares ended Thursday’s trading session at $5.79, leaving the company with a market capitalization of approximately $104 million.
A revised agreement signed on Wednesday and disclosed through a Thursday Form 8-K filing extends the maturity date of 60 million USDT from December 4 to December 4, 2027. The remaining 105 million USDT must still be repaid by June 30, 2027. Consequently, Nakamoto has avoided any scheduled loan repayments for the remainder of this year.
The updated terms also provide some flexibility around collateral calculations. Kraken will now include the net value of Nakamoto’s Bitcoin derivatives positions when assessing its collateral coverage. This includes put options that can generate gains when Bitcoin prices decline.
Tyler Evans, Nakamoto’s chief investment officer, said the revised arrangement provides additional time to manage the company’s financial obligations while improving the stability of its collateral structure.
Bitcoin Price Decline Shrinks Nakamoto’s Collateral Buffer
Nakamoto’s latest quarterly filing shows that the company had deposited 3,030 BTC out of its total 4,283 BTC holdings with Kraken as collateral by the end of September. Those pledged assets were valued at approximately $253 million when Bitcoin traded near $83,500.
The recent market decline has significantly reduced that cushion. With Bitcoin trading below $69,000 on Friday, the pledged holdings are now worth approximately $208 million. CoinDesk estimates that their current value represents roughly 126% of Nakamoto’s $165 million debt.
If the collateral valuation falls below Kraken’s required maintenance threshold, Nakamoto could be forced to repay a portion of the loan, deposit additional Bitcoin, or undertake both actions. The company has approximately 1,253 BTC that remain unpledged, representing another $86 million in potential collateral at current prices.
The inclusion of derivatives positions under the amended agreement could help Nakamoto maintain its required collateral coverage. Kraken will assess the net value of the pledged derivatives account each day and incorporate it into the collateral calculations. Any negative valuation, however, will be treated as zero.
The September-quarter filing further revealed that Nakamoto had written call options covering 2,150 BTC, with strike prices ranging from $80,000 to $110,000. By selling these contracts, the company collected premiums but surrendered potential upside gains above the agreed strike prices.
Nakamoto also held put options covering 2,000 BTC at a $55,000 strike price, scheduled to expire on December 25. At the end of September, the company’s entire options portfolio carried a negative valuation of approximately $6 million. Under the revised collateral arrangement, that deficit would not provide any additional collateral value.
Nakamoto initially secured the $210 million Kraken loan last December at an annual interest rate of 8%, when its Bitcoin reserves stood at nearly 5,400 BTC. However, the company gradually reduced its holdings to finance operations and manage debt. It sold 284 BTC in March, followed by approximately 600 BTC during the second quarter, directing $45 million of the resulting proceeds toward repaying Kraken.
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