• BTCS filed to raise up to $2 billion to expand Ethereum holdings and scale staking operations.
• The offering could result in the creation of over 390 million new shares, potentially leading to significant dilution for current investors.
• BTCS used over 38,000 ETH as collateral for a $51.5 million USDT loan on the Aave DeFi platform.

BTCS Inc. has filed a $2 billion mixed-shelf registration with the U.S. Securities and Exchange Commission. The blockchain infrastructure firm plans to raise capital to expand its Ethereum holdings and decentralized finance operations. The move reflects a growing reliance on both public markets and on-chain leverage.

BTCS Seeks Flexible Capital Raise for Ethereum Strategy

The Form S-3 filing allows BTCS to issue various securities, including stock, warrants, and debt instruments. This gives the firm flexibility to raise funds in phases, based on market conditions. The proceeds will be used to purchase ETH and support validator node expansion.

BTCS will also allocate part of the capital to block-building operations under its Builder+ infrastructure. Funds may be used for working capital and general operations. This structure helps BTCS act quickly without submitting separate filings for each raise.

Large Raise May Lead to Share Dilution

By issuing the entire $2 billion at the current share price of $5.08, BTCS could issue more than 390 million shares. This amount is well above the present 47.9 million outstanding shares, and this is an issue of concern to investors as far as dilution is concerned. The rise in the number of shares may affect existing shareholders significantly.

Nevertheless, BTCS sticks to its Ethereum-first model, although there is the threat of dilution. It recently purchased 14,240 ETH and increased its total holdings to 70,028 ETH. The current value of these assets is approximately $270 million. 

DeFi Lending Used to Leverage ETH Holdings

BTCS disclosed a $51.5 million USDT loan using Aave, a decentralized lending platform. The loan was collateralized with over 38,000 ETH. This reflects BTCS’s integration of DeFi tools into its treasury management.

The strategy allows BTCS to borrow while retaining ETH exposure. However, falling ETH prices could trigger liquidation penalties of 5% to 10%. Such a scenario could also impact its convertible note agreements.

Maintaining SEC Eligibility Remains Critical

BTCS has more than 200 million in public float, giving them the unrestricted use of the shelf. Companies below $75 million face offering limits. By holding on to this threshold, BTCS can raise capital free of any regulatory restrictions.

The company also registered to sell an additional five million shares of existing convertible notes and warrants. When utilized, they can bring in an extra $12 million in investment capital. BTCS is maintaining a balance between capital strategy and market environment, and regulatory positioning.