B HODL Plc has set up a new way to borrow money using its existing Bitcoin as security. Think of it like a mortgage, but instead of a house, the company puts up Bitcoin as collateral.
Under this arrangement, B HODL can take out loans from CoinCorner Ltd when it chooses, rather than selling its Bitcoin to raise cash. The loans will be limited and tightly controlled.
At most, the company will be able to borrow up to half the value of the Bitcoin used as security, and the total borrowing will never exceed 20% of the value of its overall Bitcoin holdings.
The loans will be interest-only and can last for up to four years. Importantly, B HODL says it plans to use the borrowed money to buy more Bitcoin, increasing the amount it holds rather than reducing it.
Because CoinCorner is already a significant shareholder in B HODL, the arrangement counts as a related-party transaction. Independent directors reviewed the terms and said they believe they are fair to shareholders.
The company says it will update investors whenever it draws down a loan or buys more Bitcoin. Chief executive Freddie New said the aim is to “grow Bitcoin per share” over the long term by managing its holdings more efficiently.