Trump Media & Technology Group has committed roughly 73% of its bitcoin holdings to an options scheme that permits the counterparty to reuse the coins, according to a disclosing statement in its third-quarter 10-Q filing on Monday, just three weeks ahead of the date when holders of its $1 billion in convertible notes can demand cash repayment.
During Monday’s earnings call, Chief Financial Officer Phillip Juhan reported that the Truth Social parent organization owned approximately 15,649 BTC as of September 30, alongside 7 million shares of BlackRock’s IBIT product. Out of that total stack, 11,385.20 coins were allocated to what the organization terms its bitcoin yield optimization strategy.
The regulatory filing indicates that this initiative mandates Trump Media to provide bitcoin security “that the counterparty can rehypothecate at their sole discretion.” At the end of the quarter, the locked-up coins held an estimated fair market value of $951.4 million. The 10-Q document does not disclose the identity of the counterparty.
An additional 4,260.73 BTC, valued at $356.1 million on September 30, serves as security for the convertible notes and cannot be withdrawn or transferred until the stipulations of the indenture are fulfilled.
Combined, these two reserves comprise approximately 15,646 BTC, representing virtually the entirety of the portfolio outlined by Juhan.
How the Trump Media options program works
The regulatory document explains that Trump Media purchases and sells covered put and call options on bitcoin, settled directly in bitcoin, in order to “generate yield on these assets and increase our principal balance of bitcoin.” Yield premiums are received in bitcoin and are “immediately rehypothecated to our digital asset manager to reinvest.”
As the quarter concluded, the business had written call options referencing 4,838.40 BTC with strike prices ranging between $68,000 and $92,000, as well as put options on 1,500 BTC priced at $75,000 to $80,000, with all contracts expiring in October.
A dedicated risk factor section outlines the underlying trade-offs. The firm notes that its yield counterparties “may not be rated” by credit evaluation agencies, that its freedom to sell or utilize committed bitcoin is constrained while the agreements remain active, and that in scenarios where the positions are unsecured, “we may be unable to recover deployed bitcoin in a counterparty insolvency.”
Juhan mentioned that Trump Media acquired 4,359 bitcoin during the quarter using funds generated from a partial liquidation of its IBIT holding, marking a transition toward “third-party institutional” oversight of its corporate treasury.
A $409.7 million profit and a Nov. 30 deadline
The third-quarter cryptocurrency market surge propelled Trump Media into paper profitability. The enterprise registered a net income of $409.7 million, largely propelled by a $378.1 million valuation increase on digital assets as bitcoin rose from roughly $59,000 on June 30 to approximately $84,000 on September 30. Conversely, adjusted EBITDA remained negative at a loss of $12.3 million, and the corporation accumulated $234.2 million in losses over the initial nine months.
Asset valuations have since retreated from those peaks. With bitcoin hovering near $74,200 on Tuesday morning, the 15,649 coins translate to roughly $1.16 billion, sitting about $145 million lower than the quarter-end valuation.
The more substantial hurdle involves the company’s debt notes. Investors holding the $1 billion of 0% senior secured convertible notes, which mature in May 2028, possess the right to compel Trump Media to repurchase them at full principal value using cash on November 30. General Counsel Scott Glabe stated that notification letters have been dispatched and noteholders have until late in the month to reply, preventing the firm from currently determining its precise cash obligation.
Interim CEO Kevin McGurn outlined that the repayment strategy will rely on “a mix of cash and credit” rather than issuing fresh equity. “We want to preserve as much of our Bitcoin as possible to continue our yielding strategy and allow that asset to recover,” he noted.
According to the 10-Q filing, the company might secure a new credit facility to refinance a portion or all of the outstanding notes, though it cautions that “there can be no assurance” of achieving this under favorable conditions. Juhan quantified gross financial assets at $2.3 billion, encompassing $182 million in cash, $211 million in short-term holdings, and $1.7 billion in bitcoin and crypto-linked holdings.
Trump Media is not the sole corporate treasury under financial strain. Strategy, the preeminent corporate holder, dropped below its average purchase cost on Monday. Furthermore, Trump Media encounters intensified political scrutiny following Democratic victories in Congress, with party leaders committing to scrutinize crypto initiatives tied to the Trump family, and incoming Senate Banking Committee Chair Elizabeth Warren preparing her own oversight campaign.
Shareholders are scheduled to vote on December 14 regarding the planned business combination with fusion energy enterprise TAE Technologies, a transaction leadership anticipates finalizing before the conclusion of the year.
Originally published at https://bitcoinmagazine.com/news/trump-media-pledges-73-percent-bitcoin.
