Nakamoto Faces $165M Kraken Debt, Exceeding Its Entire Market Value

Roughly 70% of Nakamoto’s Bitcoin holdings are pledged as collateral to Kraken. The company acquired these coins at an average price of around $118,000 each, while Bitcoin is now trading below $69,000.

David Bailey’s Bitcoin treasury company, Nakamoto (NAKA), has accumulated more debt to Kraken than its entire current stock market valuation. However, the company has secured an additional year to manage part of its outstanding obligations.

Nakamoto primarily operates by holding Bitcoin. The company currently owes cryptocurrency exchange Kraken 165 million USDT, a dollar-pegged stablecoin issued by Tether. The loan is backed entirely by its Bitcoin holdings. Meanwhile, Nakamoto shares closed at $5.79 on Thursday, putting its total market capitalization at approximately $104 million.

Under an agreement amendment signed Wednesday and revealed in a Thursday Form 8-K filing, the repayment deadline for 60 million USDT, originally scheduled for December 4, has been extended to December 4, 2027. The remaining 105 million USDT is still due on June 30, 2027. This means Nakamoto no longer faces any loan repayment obligations before the end of this year.

Kraken has also revised its collateral terms, allowing the net value of Nakamoto’s Bitcoin derivatives positions to count toward its collateral requirements. These positions include put options designed to generate returns if Bitcoin prices decline.

Nakamoto Chief Investment Officer Tyler Evans said the revised agreement provides the company with additional financial flexibility and strengthens the resilience of its collateral position.

Nakamoto’s Collateral Cushion Comes Under Pressure

Nakamoto’s quarterly filing, released this week, revealed that 3,030 of its total 4,283 BTC holdings were pledged to Kraken as collateral at the end of September. At the time, those Bitcoin holdings were valued at approximately $253 million, based on a market price near $83,500.

However, with Bitcoin falling below $69,000 on Friday, the pledged coins are now worth approximately $208 million. According to CoinDesk calculations, this represents around 126% of Nakamoto’s outstanding loan balance.

If the collateral value drops below a predetermined maintenance threshold, Nakamoto must repay part of the debt, provide additional Bitcoin as collateral, or take both measures. The company still has approximately 1,253 unpledged BTC available, worth roughly $86 million at current market prices.

The revised derivatives arrangement could provide additional protection against a potential collateral shortfall. Under the updated agreement, Kraken evaluates the net value of Nakamoto’s pledged derivatives account daily and includes that amount in its collateral calculations. However, any negative net value is treated as zero.

Nakamoto’s September-quarter report also disclosed that the company had sold call options covering 2,150 BTC, with strike prices ranging from $80,000 to $110,000. In return, it collected premiums while giving up potential profits if Bitcoin climbed above the specified strike prices.

Additionally, Nakamoto purchased put options covering 2,000 BTC at a strike price of $55,000, with an expiration date of December 25. At the end of September, the combined derivatives portfolio had a negative value of approximately $6 million, meaning it would have contributed nothing toward collateral requirements under the revised terms.

The original $210 million loan was established last December with an annual interest rate of 8%, when Nakamoto held nearly 5,400 BTC. The company subsequently sold 284 BTC in March to cover operating expenses, followed by another approximately 600 BTC during the second quarter. It used $45 million from those sales to repay part of its Kraken debt.

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