Bitcoin Exposure and the Cost of Debt Financing: Evidence from U.S. Publicly Listed Firms

Lamin Dampha

doi:10.62019/53fe7e36

Authors

Lamin Dampha School of Business and Public Administration, University of the Gambia, Kanifing, The Gambia.

DOI:

https://doi.org/10.62019/53fe7e36

Keywords:

Bitcoin exposure; cost of debt financing; creditor pricing; corporate finance; U.S. publicly listed firms; fixed effects; system GMM.

Abstract

This study investigates whether Bitcoin exposure affects the cost of debt financing among U.S. publicly listed firms, extending the emerging literature on corporate cryptocurrency exposure from firm risk and equity sensitivity to creditor pricing and borrowing costs. Motivated by the growing integration of digital assets into corporate financial policy, the paper examines whether creditors price Bitcoin exposure as a risk-enhancing firm characteristic. Drawing on the literature on creditor pricing, firm risk, and financing frictions, the study argues that Bitcoin exposure may increase debt-financing costs by amplifying perceived volatility, opacity, and uncertainty in firm-level financial positions. Using a panel-data framework, the analysis estimates pooled OLS, fixed-effects, random-effects, firm-clustered fixed-effects, lagged-exposure, dynamic fixed-effects, and two-step system GMM models. The results consistently show that Bitcoin exposure is positively and significantly associated with the cost of debt financing. In the preferred fixed-effects specification with firm-clustered robust standard errors, firms with Bitcoin exposure face materially higher effective debt costs than non-exposed firms. This finding remains robust in the dynamic fixed-effects and system GMM specifications, indicating that the main relationship is not driven by a single estimation approach. Diagnostic tests support the use of fixed effects, confirm the presence of heteroskedasticity, and show that multicollinearity is not a concern. By contrast, lagged Bitcoin exposure is not significant, and the dynamic specifications do not support a conventional positive persistence pattern in debt-financing costs. Overall, the findings suggest that debt markets treat Bitcoin exposure as a financially relevant source of firm-level risk and incorporate it into borrowing costs. The study contributes to the emerging literature on corporate cryptocurrency exposure by extending it from equity-market and firm-risk outcomes to a core corporate-finance variable: the cost of debt financing

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