It was specifically stated that the sale did not result from a margin call or an unscheduled forced liquidation. The transaction was explained as having been conducted by mutual agreement between the parties during the September 24th renewal period predetermined in the loan agreement. Therefore, the Bitcoin sale reported in the news should not be interpreted as the company panicking and selling off all its assets on the open market.
With this move, PowerCompute reduced its secured debt from $19.4 million on June 30 to approximately $1.25 million. The company reported that as of September 25, it held approximately 62 Bitcoin, which, at the $84,500 price used in the announcement, was worth approximately $5.2 million.
The management’s new strategy is also noteworthy. PowerCompute plans to go down the path of treating Bitcoin not as a leveraged treasury asset to be grown through debt, but as working capital that can be used for equipment purchases, operations, and company growth.
This development has brought the risks of publicly traded companies’ Bitcoin strategies back into focus. While Bitcoin-backed debt can provide capital during bull runs, it can also expose companies to additional collateral requirements or selling pressure during price declines.
*This is not investment advice.
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