Nakamoto’s Debt Crisis Deepens as $165M Kraken Liability Tops Market Value

Approximately 70% of Nakamoto’s Bitcoin treasury has been committed as collateral for its borrowing from Kraken. These coins were purchased at an average price of nearly $118,000 each, but Bitcoin’s latest decline below $69,000 has significantly reduced their market value.

David Bailey’s Bitcoin treasury company, Nakamoto (NAKA), is facing a growing financial challenge as its $165 million debt to Kraken is now substantially higher than its approximately $104 million market capitalization. Nevertheless, a recently negotiated loan amendment has given the company additional time to manage its outstanding liabilities.

Nakamoto’s primary business involves accumulating Bitcoin and maintaining it as a corporate treasury asset. The company borrowed 165 million USDT, Tether’s dollar-pegged stablecoin, from cryptocurrency exchange Kraken through a loan backed entirely by Bitcoin. Its shares settled at $5.79 on Thursday, leaving the company’s total market valuation at around $104 million.

A modification to the loan agreement, signed Wednesday and reported in a Thursday Form 8-K filing, changes the maturity date for 60 million USDT. The amount was initially due on December 4 but has now been extended until December 4, 2027. The remaining 105 million USDT continues to carry a June 30, 2027, repayment deadline. This arrangement removes Nakamoto’s scheduled repayment requirements for the remainder of 2026.

The amendment also changes the way Kraken measures the company’s collateral coverage. The exchange will now include the net value of Nakamoto’s Bitcoin derivatives positions in its calculations. This covers put options that could provide financial gains if Bitcoin experiences further declines.

Tyler Evans, Nakamoto’s chief investment officer, said the revised loan conditions extend the company’s financial runway and make its collateral arrangements more resilient.

Falling Bitcoin Prices Put Nakamoto’s Loan Security Under Pressure

Nakamoto’s latest quarterly report showed that 3,030 BTC of its 4,283 BTC treasury had been pledged to Kraken by September 30. At the time, these assets were worth approximately $253 million, with Bitcoin trading near $83,500.

The subsequent market downturn has weakened that collateral position. With Bitcoin falling below $69,000 on Friday, the pledged holdings are now valued at approximately $208 million. CoinDesk’s calculations suggest that the collateral currently covers around 126% of Nakamoto’s $165 million loan.

This leaves the company increasingly sensitive to additional Bitcoin price declines. If its collateral falls below Kraken’s required maintenance threshold, Nakamoto may have to make a partial loan repayment, provide more Bitcoin as security, or combine both measures.

Nakamoto has approximately 1,253 BTC that remain unpledged. At the current market price, these reserves are worth roughly $86 million and could be used to increase its collateral if necessary.

The revised derivatives provisions may provide some additional flexibility. Kraken will review the net value of Nakamoto’s pledged derivatives account every day and incorporate positive valuations into its collateral calculations. Any negative balance will be treated as zero.

The quarterly filing also disclosed that Nakamoto had sold call options covering 2,150 BTC, with exercise prices ranging from $80,000 to $110,000. Through these transactions, the company collected option premiums but agreed to limit its potential upside if Bitcoin moved above those price levels.

Meanwhile, Nakamoto purchased put options covering another 2,000 BTC at a $55,000 strike price. These contracts are scheduled to expire on December 25. The company’s overall derivatives portfolio was valued at negative $6 million at the end of September, meaning it would not have provided additional collateral under the revised arrangement.

Nakamoto originally borrowed $210 million from Kraken last December at an annual interest rate of 8%, when its treasury contained nearly 5,400 BTC. Since securing the financing, the company has gradually sold Bitcoin to cover operating costs and reduce its borrowing. It disposed of 284 BTC in March and approximately 600 BTC during the second quarter, using $45 million from those transactions to repay Kraken.