The dangers of leverage, $NAKA edition: The company has $210M in debt to Kraken paying 8% APR backed by most of their Bitcoin stash, or 4405 BTC. This loan is due in December and as BTC price lowers, their Loan-to-Value ratio gets worse and worse. At $63,500, they're at 75% LTV At $59,600, they're at 80% LTV At $56,000, they're at 85% LTV They have a little bit of dry powder left, about 650 BTC that are not pledged to the loan, but they need it to service the 8% interest and the shortfall between revenue and expenditures (particularly executive salaries). Historically, they've tried to hover around 70% LTV, suggesting that the liquidation price isn't too far away from that. So to sum up, there are many ways for this to go wrong: 1. Bitcoin drops enough where they get liquidated ($50k would certainly do it, probably something higher would also do it) 2. BItcoin stays down until December and they can't roll over the loan. 3. Bitcoin stays down until December and they roll over the loan on punitive terms that reduces their stack quicker than they are now. They would likely have to sell some Bitcoin because they're not getting $210M in loans in this scenario. There's really only one way for things to go right: Bitcoin price goes up massively by December. Even then, the interest payments and operations expenses will likely destroy a ton of value. The lesson here isn't to dunk on the company. It's just showing you how fragile leveraged positions are. You can have the world's most pristine asset and still lose if the market moves against you.