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The company behind the first ASX-listed exchange-traded fund (ETF) for Bitcoin has announced plans to increase its holdings in the cryptocurrency asset to 2,100 units by 2027, which at current valuations would be worth $376 million.
If DigitalX (ASX: DCC) manages to deliver on this ambition its holdings would more than quadruple in that timeframe, up from almost 500 BTC on 23 July which were worth $91.3 million at the time.
Perth-based DigitalX, which was listed in 2014 and also holds cryptocurrency holdings on the Solana blockchain platform, had a market capitalisation of $108 million at the close of trade on Friday.
The group secured investment commitments last month from some of the leading global players and executives in the cryptocurrency industry, and claims its latest target aligns with key international digital asset companies integrating BTC as a core treasury asset.
The DigitalX board's investment thesis is driven by strategic optionality, liquidity and balance sheet strength, and the claim that Bitcoin is a hedge against inflation - a similar argument made by Sydney-based digital currency exchange Block Earner when it launched crypto-backed home loans recently.
"Bitcoin stands as the digital equivalent of gold; resilient, scarce, and primed for growth amidst increasing global adoption. Viewing Bitcoin as a treasury asset is akin to backing the lone frontrunner in a one-horse race," says DigitalX chairman Leigh Travers.
"This strategy not only fortifies our balance sheet but also aligns us with visionary companies spearheading corporate Bitcoin adoption.
"We are excited to accelerate our journey toward holding 2,100 BTC, leveraging market opportunities to deliver enduring value to our shareholders."
To deliver on this strategy the company plans to explore a range of capital management options including debt instruments like convertible notes or bonds, the conversion of existing assets into Bitcoin, strategic capital raises as appropriate, 'at the market' facilities and operating revenue.
"Our decision to pursue our 2,100 Bitcoin accumulation strategy is consistent with our historical business and underscores our ongoing belief in Bitcoin as an investment asset with significant long-term appreciation potential," adds DigitalX interim CEO Demetrios Christou.
In today's announcement, DigitalX highlights several risks for its strategy including Bitcoin price volatility, and the risk of hacks, theft, or loss of some or all Bitcoin holdings - an issue the company experienced firsthand due to the collapse of Japan’s Mt Gox Bitcoin Exchange in 2014.
DigitalX, known as Digital CC at the time, lost 351 Bitcoins due to that incident which stemmed from a hack in 2011, and this year finally secured a recovery of 41.98 BTC.
Other risks noted by the company include issues with access to capital markets, operating revenue, and how market valuations react to the net asset value (NAV) of its holdings, with current NAV multiples in other global markets sitting above 1.5x.
DCC shares are up 5.48 per cent at 7.7 cents per share (cps) in early trading.
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