BTCS leverages $4M on AAVE at 2.78% net cost to boost ETH stake

BTCS Inc. (NASDAQ: BTCS) filed an 8-K disclosing a new decentralized-finance (DeFi) borrowing transaction that materially increases its leverage and Ethereum exposure.

Rhea-AI Filing Summary

BTCS Inc. (NASDAQ: BTCS) filed an 8-K disclosing a new decentralized-finance (DeFi) borrowing transaction that materially increases its leverage and Ethereum exposure.

Direct financial obligation: On 17 June 2025 the company drew an additional $2.5 million USDT from the AAVE lending protocol, lifting total AAVE borrowings to $4.0 million USDT. Borrowings are denominated in the dollar-pegged stablecoin USDT.

Collateral & loan structure: • The loan is secured by ≈3,900 ETH (≈$9.85 million at $2,528/ETH). • Resulting loan-to-value is roughly 40 %, in line with a board-approved ceiling. • AAVE applies an 80 % liquidation threshold to ETH; if ETH price declines enough for the health factor to drop below 1, automatic (smart-contract) liquidations can occur. • There is no fixed maturity date; repayment is at BTCS’s discretion, subject to maintaining the health factor.

Economics: • Variable borrowing rate at draw date: 4.71 % p.a. • ETH collateral simultaneously earns 1.92 % on AAVE. • Net cost of capital ≈ 2.78 % (4.71 % paid minus 1.92 % earned).

Use of proceeds: Management used the incremental USDT to purchase additional ETH, further concentrating the balance sheet in a single crypto-asset. The board has authorised cumulative AAVE borrowings up to $4 million USDT, a limit now reached.

Regulation FD disclosure: A related press release (Exhibit 99.1) dated 20 June 2025 highlights the expansion of Ethereum holdings; the release is furnished, not filed.

Key takeaways for investors:

• BTCS is employing leverage to expand its core digital-asset position at an attractive headline cost, betting on continued ETH appreciation.
• The structure is high risk-high reward; a sharp ETH decline could trigger forced liquidations and crystallise losses.
• Interest rates on both sides of the AAVE transaction are floating and may change with DeFi market conditions, adding earnings volatility.

Positive

• Low net cost of capital (~2.78 %) enables BTCS to amplify ETH exposure relatively cheaply.
• Collateral cushion at 40 % LTV provides headroom before AAVE’s 80 % liquidation threshold.
• No fixed maturity offers repayment flexibility, supporting liquidity management.

Negative

• Heightened liquidation risk if ETH price declines ≈26 %, potentially triggering forced sales.
• Increased balance-sheet leverage concentrates exposure in a single volatile asset.
• Variable DeFi interest rates could climb sharply during market stress, worsening cash outflows.
• Smart-contract and counter-party risk inherent in AAVE and USDT may affect collateral or borrowing terms.

Insights

Financial Analyst

TL;DR: BTCS leverages ETH at ~2.8 % net cost, increasing upside but adding balance-sheet risk; impact is strategically significant yet earnings-neutral today.

BTCS has now maxed its board-approved $4 million DeFi credit line, collateralising 3,900 ETH. The 40 % LTV is conservative relative to AAVE’s 80 % liquidation threshold, giving moderate cushion. At a 2.78 % net cost, the company acquires additional ETH more cheaply than raising equity, potentially enhancing returns if ETH appreciates. Because the loan is floating, interest expense will track on-chain utilisation rates; however, with ETH collateral also earning yield, the spread may remain modest. From an income-statement perspective, the incremental interest burden (~$112k annually) is immaterial versus BTCS’s market cap and cash position. Strategically, management is doubling down on its single-asset thesis, signalling confidence in Ethereum and in DeFi infrastructure to manage treasury operations.

Risk Analyst

TL;DR: Added leverage heightens liquidation and smart-contract risk; a 25 % ETH drawdown could trigger forced sales—negative risk-adjusted impact.

The transaction exposes BTCS to multiple layered risks: (1) Market risk—a drop of roughly 26 % in ETH price would push the AAVE health factor toward 1, forcing partial liquidation at unfavourable prices. (2) Protocol risk—smart-contract exploits or stable-coin de-pegging could impair collateral or raise borrowing costs instantly. (3) Rate risk—AAVE variable rates can spike during market stress, inflating interest expense while collateral value falls. Although the board-imposed 40 % LTV is prudent, DeFi liquidation cascades can be swift, leaving little time for manual intervention. Overall, the leverage amplifies both volatility and downside tail risk, which may concern conservative shareholders.

8-K Event Classification

3 items: 2.03, 7.01, 9.01

3 items

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement Financial

The company incurred a new significant debt or off-balance-sheet obligation.

Item 7.01 Regulation FD Disclosure Disclosure

Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, or exhibit attachments filed with this report.

FAQ

How much has BTCS (BTCS) borrowed on AAVE in total?

As of 17 June 2025, BTCS has borrowed $4 million USDT on the AAVE protocol.

What collateral does BTCS pledge for the AAVE loan?

The company pledges approximately 3,900 ETH valued at $9.85 million as collateral.

What is the current interest rate on BTCS’s AAVE borrowing?

The variable borrowing rate was 4.71 % per annum at the time of the latest draw.

What is the loan-to-value (LTV) on BTCS’s DeFi loan?

The LTV is roughly 40 %, consistent with the board’s maximum authorised threshold.

How will BTCS use the proceeds from the additional $2.5 million USDT?

Management used the funds to purchase more Ethereum (ETH), expanding the company’s crypto holdings.

Can the AAVE loan be liquidated automatically?

Yes. If the health factor falls below 1, AAVE can automatically liquidate part of BTCS’s ETH collateral.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Accepted by SEC EDGAR 06/20/2025 - 09:00 AM Learn about SEC filing dates

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 17, 2025

BTCS INC.

(Exact name of registrant as specified in its charter)

Nevada		001-40792		90-1096644
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

9466 Georgia Avenue #124, Silver Spring, MD 20910

(Address of Principal Executive Offices, and Zip Code)

(202) 430-6576

Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		BTCS		The Nasdaq Stock Market (The Nasdaq Capital Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Beginning on June 17, 2025, BTCS Inc. (the “Company”) borrowed an additional $2.5 million USDT from AAVE, a decentralized finance lending protocol, bringing the total borrowings on AAVE to $4 million USDT. The total AAVE borrowing: (i) is collateralized by approximately 3,900 Ethereum (ETH) with an approximate value of $9.85 million based on an ETH price of $2,528, and (ii) has no fixed maturity date but is subject to liquidations or partial liquidations if the health factor (“HF”) falls below one. The HF is calculated by taking the total value of the ETH collateral, multiplying it by its liquidation threshold (approximately 80% for ETH), and then dividing that result by the total value of the borrowed USDT.

The loan carries a variable interest rate set by AAVE’s smart contract, which adjusts based on market conditions and is published at aave.com. At the time of the additional borrowing, the interest rate was approximately 4.71% per annum. The $9.85 million in ETH collateral also earns interest at a variable rate, which was 1.92% at the same time. As a result, the effective net cost of capital—interest paid minus interest earned—is approximately 2.78%.

The proceeds from the loan were used to acquire additional ETH. The Company’s Board of Directors authorized management to borrow up to $4,000,000 in USDT utilizing AAVE with a loan-to-value of no more than 40% at the time of borrowing.

Item 7.01. Regulation FD Disclosure.

On June 20, 2025, BTCS Inc. issued a press release regarding expanding its Ethereum holdings.

The information in Item 7.01 of this report, including the information in the press release attached as Exhibit 99.1 to this report, is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Furthermore, the information in Item 7.01 of this report, including the information in the press release attached as Exhibit 99.1 to this report, shall not be deemed to be incorporated by reference in the filings of the registrant under the Securities Act of 1933.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit No.		Exhibit
99.1		Press Release
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BTCS INC.
Date: June 20, 2025	By:	/s/ Charles W. Allen
	Name:	Charles W. Allen
	Title:	Chief Executive Officer