Around 70% of Nakamoto’s Bitcoin reserves are currently locked up as collateral for its loan from Kraken. The company accumulated these Bitcoin holdings at an average purchase price of approximately $118,000 per coin, significantly above Bitcoin’s current market price of less than $69,000.
David Bailey-led Bitcoin treasury firm Nakamoto (NAKA) is dealing with a growing debt burden, as its $165 million obligation to Kraken now exceeds the company’s entire market capitalization. However, a recent agreement with the crypto exchange has given Nakamoto additional time to manage its repayment commitments.
Nakamoto’s primary business model involves holding Bitcoin as a treasury asset. The company owes Kraken 165 million USDT, Tether’s dollar-backed stablecoin, through a loan secured entirely by its BTC holdings. Despite this substantial liability, Nakamoto’s shares closed Thursday at $5.79, placing its total market value at approximately $104 million.
According to a revised agreement signed Wednesday and disclosed in a Thursday Form 8-K filing, Kraken has extended the deadline for repaying 60 million USDT from December 4 to December 4, 2027. The remaining 105 million USDT retains its original maturity date of June 30, 2027. The extension means Nakamoto will not have to make any loan repayments before the end of 2026.
The updated agreement also introduces changes to the collateral requirements. Kraken will now consider the net value of Nakamoto’s Bitcoin derivatives positions when calculating collateral coverage. These positions include put options that can benefit from declining BTC prices.
Nakamoto Chief Investment Officer Tyler Evans said the revised terms provide the company with a longer financial runway and improve the overall resilience of its collateral arrangements.
Bitcoin Decline Raises Concerns Over Nakamoto’s Loan Collateral
Nakamoto’s quarterly financial report, published this week, showed that 3,030 BTC from its total holdings of 4,283 BTC had been pledged to Kraken by the end of September. At that time, the collateral was worth approximately $253 million, with Bitcoin trading around $83,500.
Since then, the market downturn has reduced the value of those assets. At Friday’s price below $69,000, the pledged Bitcoin is now valued at approximately $208 million. CoinDesk calculations indicate that the collateral is worth around 126% of the company’s outstanding $165 million loan.
A further decline in Bitcoin’s price could put Nakamoto under pressure to maintain the required collateral ratio. If the value falls below Kraken’s maintenance threshold, the company may need to repay part of the outstanding debt, provide additional BTC collateral, or take both steps.
Nakamoto still has approximately 1,253 BTC that have not been pledged to the exchange. At current market prices, these remaining holdings are worth roughly $86 million and could potentially be used to strengthen its collateral position.
The revised derivatives provisions could offer another layer of protection. Under the new arrangement, Kraken will calculate the net value of Nakamoto’s pledged derivatives account daily and include it in collateral assessments. Any negative net valuation will be treated as zero rather than reducing the available collateral.
The company’s quarterly disclosure also revealed that Nakamoto had sold call options covering 2,150 BTC at strike prices ranging from $80,000 to $110,000. These transactions generated premium income but limited the company’s ability to benefit from Bitcoin price increases above the specified levels.
Additionally, Nakamoto purchased put options covering 2,000 BTC at a $55,000 strike price, with expiration scheduled for December 25. The entire derivatives portfolio had a negative value of approximately $6 million at the end of September, meaning it would contribute no positive collateral value under the revised terms.
The original $210 million borrowing arrangement was established with Kraken last December at an annual interest rate of 8%, when Nakamoto held nearly 5,400 BTC. Since then, the company has sold portions of its Bitcoin reserves to finance operations and reduce its debt exposure. It disposed of 284 BTC in March and approximately 600 BTC during the second quarter, using $45 million from the sales proceeds to repay Kraken.
