A trend of companies buying bitcoin to diversify their balance sheets and potentially boost their valuations is growing in Asia, with Japan’s Metaplanet and South Korea’s K Wave Media aiming to replicate the strategy.
Bitcoin treasuries are typically operated by companies that are otherwise not involved in digital assets and buy the currency to hold on their balance sheets.
Michael Saylor’s Nasdaq-listed Strategy, formerly known as MicroStrategy when it was an enterprise software maker, started buying bitcoin in 2020 and has since issued common and preferred shares and convertible bonds to buy a total of 592,100 bitcoin over the years.
Strategy's stock has soared more than 2,200% since August 2020 when it first started holding bitcoin on its balance sheet as a hedge against future inflation. Bitcoin is up a little less than 800% over the same period.
Following Strategy's success, there are now about 61 publicly listed companies running bitcoin treasury strategies globally, with more than 20 of them in Asia, according to Standard Chartered.
Metaplanet, originally a hotelier, is the most prominent in the region. In June, it announced a plan to raise about US$5.4bn to buy bitcoin, saying it expects to accumulate 210,000 bitcoin by the end of 2027. It currently owns 10,000.
In addition to bitcoin-focused operations, Metaplanet owns and operates a hotel in Tokyo, which is being rebranded as The Bitcoin Hotel and is set to open in the first quarter of 2026, according to its website.
The company did not respond to a request for comment.
Entertainment company K Wave Media Group is the latest company in Asia to get on the bandwagon, announcing in June that it will fund bitcoin purchases through a sale of up to US$500m of the company’s shares.
Nasdaq-listed K Wave said it is looking to be the “Metaplanet of Korea,” but will continue to focus on its core K-pop content related businesses.
“Our entertainment business will continue. The bitcoin treasury plan serves as a foundation and will become the catalyst for creating maximum shareholder value,” Ted Kim, K Wave CEO, told IFR. “We want to buy bitcoin faster and will be raising capital through other means."
Risk shifting
Experts and analysts warned that while investing in bitcoin to diversify their balance sheets makes sense because Asian companies face US dollar exposure risks and limited regional investment opportunities, totally moving away from their core businesses is a concern.
“Companies adopting more bitcoin treasuries may do it as a way to manage currency risk (or at least that may be their argument), but my concern is simply that now companies are becoming more like funds,” said Ben Charoenwong, an associate finance professor at the Insead business school in Singapore.
Some of these companies may have been “exposed by the market as having poor business models and outlooks, and their managers may be engaging in a gamble for resurrection, a classic case of risk shifting that may not be productive”, he said.
“Instead of returning capital to investors and shutting down, these companies are considering going to the casino to try to raise their value or go bankrupt,” Charoenwong said.
Geoffrey Kendrick, global head of digital assets research at Standard Chartered, agreed. “Companies say it is to diversify balance sheet – but when you see the size of where Metaplanet is, your entire being as a company becomes a proxy for bitcoin. They end up moving away totally from their core business. Metaplanet wants to get to 1% of all bitcoin ever, and if they get to that space whatever they were doing before becomes completely irrelevant,” he said.
Still, investors like these companies. Metaplanet's stock has surged nearly 400% over the past two months and is up about 2,000% over the past year, while K Wave Media stock is up about 130% since it unveiled its US$500m bitcoin treasury plan.
“Appetite reflects a growing belief that bitcoin is a durable asset class and a better long-term store of value than treasuries or fiat, as well as the marketing halo of attracting retail shareholders," said Barnaby Robson, head of deal strategy for Hong Kong at KPMG China.
Analysts say the draw is also because of restricted direct access to cryptocurrencies in some jurisdictions.
“That’s what these bitcoin treasury plays are fulfilling. Those that are in regions with restricted access – there is a need for it and it makes sense,” said Kendrick. “If that access was not restricted, I would say this is a strange programme.”
To be sure, South Korea’s financial regulator is moving towards allowing institutional crypto trading later this year, while Japan is aiming to introduce a bill next year to give crypto assets legal status as financial products.
While companies with bitcoin strategies are investor darlings at the moment, it is not clear how they will be affected if the bitcoin price falls significantly.
KPMG’s Robson noted that “boards still need to secure institutional-grade custody, reputable over-the-counter execution, and set clear risk limits. They will also need to think through sensitivity analysis, and accounting disclosure – such that they have an acceptance and clear understanding of the potential share price and financial statement volatility such strategies can bring.”
“You are adding risk to the balance sheet and you are adding risk to those who buy the debt. [Most of the time] investors in those firms know that they have this strategy, like in Metaplanet’s case. In some of the others, investors may not be aware and may have more risk in the portfolios than investors are aware of,” Standard Chartered’s Kendrick said.