Digital Gold Co. Expands Bitcoin Holdings Ahead of Launch

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Matador Technologies Inc. (MATA:TSX.V) announced it is continuing to expand its Bitcoin holdings as it develops its digital gold product, which is set to launch at the end of the quarter and will combine the tangible value of physical gold with the security of the Bitcoin blockchain.

The company said it has acquired an additional 3.38 Bitcoin for CA$500,000 at an average price of US$102,703 per Bitcoin.

"Our vision has always been to bridge the gap between traditional finance and the digital future," said Chief Executive Officer Deven Soni. "With our robust financial foundation, innovative use of technology, and a focus on delivering value to our shareholders, we're confident in our ability to lead the charge in redefining how people interact with traditional assets."

Matador said it intends to "opportunistically acquire" another USD$350,000 in Bitcoin in the near term.

"The acquisition of Bitcoin aligns with Matador's long-term strategy to integrate Bitcoin as a core asset in its treasury and as the foundation for its forthcoming digital gold product," the company said in a release on Thursday.

The company's technology pairs its digital gold product with digital art on the Bitcoin blockchain. The gold is sourced through the Royal Canadian Mint through a partnership with Kitco Metals Inc. All physical gold holdings will remain stored at the Mint.

"Matador operates with zero debt, holding all Bitcoin (and Bitcoin equivalent) assets free and clear," Matador said in the release. "The company also maintains cash reserves of approximately CA$2.3 million and physical gold holdings of 2 kilograms (approximately CA$264,000), reflecting prudent financial management aimed at sustaining long-term growth and stability."

Blending Gold Ownership, Digital Art

The launch of Matador's digital product, which will blend gold ownership with digital art, is part of a larger vision to merge traditional finance with progressive digital tools, the company has said.

Alex Tapscott, an entrepreneur, business author, and seasoned capital markets professional, owns 0.04% of Matador's stock, according to Refinitiv.

"Bitcoin and other assets have captured the imagination of a younger generation that might have otherwise been interested in gold," Tapscott said. "To me, these are both things (Bitcoin and gold) that should be cornerstones of anyone's portfolio."

A major problem is that the way people invest in gold hasn't changed much from the start of the industrial era, he said. "For most of the world's population, it's all still physical gold bullion," said Tapscott, who co-wrote the bestselling book Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World, and the more recent Wall Street Journal Bestseller Web3.

Digital Artifacts Etched on Physical Gold

Much like gold's traditional use as a vessel to store value and hedge against inflation, Bitcoin attracts traders looking to profit from its price changes. The price of a Bitcoin (which hit more than US$100,000 this year) has more than doubled from March 2024.

The first decentralized cryptocurrency, Bitcoin is a digitized alternative form of payment created using encryption algorithms. Nodes in a peer-to-peer network verify transactions on a distributed ledger called a blockchain that can contain just about anything. A newer invention called crypto tokens allows a digital representation of an asset or interest in something built on a blockchain, according to Investopedia.

Tapscott described tokens as just "a container for value" and can contain whatever is needed.

Soni said the company places an automated order for gold in real-time as Matador gold is purchased, always ensuring they have an excess in the Royal Canadian Mint. According to the company's investor presentation, it is partnering with blockchain artists to create exclusive collections of 1,000 digital artifacts etched on physical gold, "blending art and blockchain technology."

The Catalyst: Uncertainty Creating Safe-Haven Demand

The threat of U.S. tariffs and a pause in the Fed's interest rate-cutting campaign is sparking safe-have demand for the yellow metal, sending it to a new record high on Thursday, reported Anmol Choubey for Reuters.

Spot gold was up 1.4% at US$2,796.15 per ounce as of 11:07 a.m. (16:03 GMT), hitting its record high level at US$2,798.24 earlier in the session. U.S. gold futures also climbed 2%.

"We are seeing keener uncertainty and anxiety about the Trump administration's new policies on trade and foreign policy ... fresh technical buying coming in as prices are trending higher now in both gold and silver," said Jim Wyckoff, a senior market analyst at Kitco Metals, according to Choubey's report.

The gold market is experiencing its best start since 2023, Neils Christensen reported for Kitco on Tuesday.

Eric Strand, founder of the boutique precious metals firm AuAg Funds, said he expects gold prices to surpass US$3,000 an ounce this year, Christensen wrote.

According to Grand View Research, the global Bitcoin market size was valued at US$17.05 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 26.2% from 2022 to 2030 as the platform can deliver cheaper and faster payments, less volatility, and also enables secure transactions.

"As a result, Bitcoin can also be used as a store of value, other than as a medium of exchange for products and services across the globe," researchers said. "Moreover, with the emergence of Bitcoin, financial transactions no longer require central authorization and are settled immediately." 

Ownership and Share Structure

According to the company, 65% is owned by management and insiders, including Founder and Director Donato Sferra, Vice President of Finance Geoff St. Clair, Director Richard Murphy, Soni, a strategic investor (through UTXO Management, LLC and 210K Capital, LP), Director Tyler Evans (through UTXO Management, LLC and 210K Capital, LP), and Founder Trevor Koverko, among others. 

The rest, about 35%, is retail, and includes Hive Digital with 3%, Kitco Metals with 1%, and Gold Fields Ltd. with 4%, the company said.

It has about 91.86 million shares outstanding and has a market cap of CA$40.47 million at the time of writing. It trades in a 52-week range of CA$0.11 and CA$0.90.