Public companies investing in bitcoin are losing money

Reporter Si Linwei

In the first quarter of 2021, the crypto assets led by bitcoin began to soar in the liquidity easing feast in the post epidemic era. The funds of Wall Street and global institutions moved. Goldman Sachs and Morgan Stanley provided exposure to institutional clients. Coinbase, as a regulated trading platform, provided a compliant investment channel. In this context, some technology companies and listed companies have taken bitcoin as a means of asset allocation into the company’s balance sheet. Tesla, the world’s largest electric vehicle manufacturer, is the most typical representative. Under the leadership of the CEO, Tesla invested 1.5 billion US dollars in bitcoin. When the first quarter results were announced, Tesla made a profit of $272 million with bitcoin, which reduced its position by 10%, successfully turning Tesla’s net profit back to normal. Seeing Tesla’s sweet taste, square, meto and other companies have followed up and want to obtain investment income with the help of cryptocurrency. However, with the change of global regulatory wind direction, cryptocurrency market fluctuates violently. To the second quarter of the financial release, institutional investors also began to appear impairment losses. The listed companies led by Tesla have also been cut “leek” by the market. On July 26, Tesla released its second quarter results after the U.S. stock market closed. According to the financial report, Tesla’s revenue in the second quarter of 2021 was $11.96 billion, up 98% year-on-year. Although Tesla Q2 financial data is very bright, exceeding market expectations. However, its bitcoin related assets were impaired by US $23 million. According to the accounting standards, the impairment means that the bitcoin price has fallen below Tesla’s cost line in the second quarter of financial accounting, so Tesla should report the impairment in the financial statements. Tesla, which has nearly 40000 bitcoins, lost $23 million, and other companies are not immune. In addition to musk, another hard core supporter of cryptocurrency is twitter founder Jack Dorsey, whose other mobile payment company square also has a large stake in bitcoin. On August 1, square released a shareholder letter announcing its second quarter financial data. Square’s gross profit rose 91% year-on-year to $1.14 billion, according to the report. Like Tesla, the results are more eye-catching. But its bitcoin investment suffered an impairment loss of $45 million. Square currently holds 8027 bitcoins, according to bitcoin Treasury. Square has bought bitcoin twice. After purchasing 4709 BTCs for the first time in October 2020, square has increased its position by US $170 million in February 2021, increasing its holding of 3318 bitcoins. Tesla invested US $1.5 billion in bitcoin. After cashing in US $272 million in the first quarter, Tesla lost $2300 in the second quarter, and there was no loss in its actual position. But with Tesla’s Square, it’s hard. Square has invested 230 million US dollars in bitcoin, and has not yet announced the reduction of its position. As of the second quarter, it has lost 45 million US dollars. Before the investment returns, square has lost 19%. The other company’s bitcoin devaluation directly exceeded hundreds of millions of dollars, but also decided to continue to increase the position of bitcoin. This “Crazy” listed company is MicroStrategy micro strategy capital. Their decision-making is like a losing gambler. They not only stay on the market, but also borrow money to increase their positions. This is an “old” technology company, which specializes in commercial marketing software business, and its share price has been in a slump for a long time before 2020. But its founder, Michael seller, is a bitcoin enthusiast. Since 2020, the company has been increasing its holdings of bitcoin and is now the largest public company in the world. MicroStrategy released its second quarter results on July 30. As of June 30, 2021, MicroStrategy held about 105085 BTCs with a book value of $2051 million and an impairment loss of $689.6 million since the acquisition. Bitcoin suffered an impairment loss of $425 million in the second quarter. “We continue to be happy with the results of our crypto asset strategy,” Michael seller said in an interview with Bloomberg. Our recent financing has enabled us to expand our digital assets, now over 105000 bitcoins. Looking ahead, we intend to continue to deploy additional funds in our crypto asset strategy. ” MicroStrategy’s founder is not joking, losing $689.6 million, but he will continue to increase his position. MicroStrategy announced on June 15 that it would use $488 million in bonds from a private offering to buy bitcoin after bitcoin’s price had fallen to $30000. For the same reason, MicroStrategy said it could also sell up to $1 billion of shares to buy bitcoin for the same reason. In the face of such a crazy investment strategy, Meitu company from China seems to be a little more insipid. It is a listed company of Ethereum which has a large open position in the organization, but its bitcoin investment also shows floating losses. On July 6, Meitu technology, a Hong Kong listed company, issued an announcement confirming that the fair value of bitcoin invested by the company had decreased by $17.3 million as of June 30, 2021, and the company would recognize impairment loss in the interim performance. The fair value of the investment in Ethereum increased by $14.7 million as of June 30, 2021, but as the Ethereum was not sold, the company will not recognize the investment as revaluation gain in the interim results. A total of US $100 million was invested in cryptocurrency, with a Book loss of $1730. Mett also suffered a small loss in the cryptocurrency market. Whether it’s $10 million or $600 million, why these large institutions have fallen into bitcoin losses is the apparent reason that the global regulatory wind has changed since May, resulting in a cumulative price correction of more than 50% of bitcoin, which has suddenly fallen through the cost line of many institutional investors. Bitcoin peaked at $64000 at the time, hitting a low of $30000 on the night of May 19, and has been fluctuating between $30000 and $40000 ever since. For most institutional investors, the cost of adding positions is more than $50000. The nodes of adding positions are also concentrated in the first quarter of 2021, which is a typical “chasing up” behavior. With the sharp fall of bitcoin price, institutional investors are also “locked up”. However, because institutional investors have more perfect risk control ability and capital reserve, their patience for return on investment is more rational than that of retail investors. These listed institutions have not disclosed any idea of reducing positions and clearing positions of cryptocurrency in their financial reports. Some founders also expressed their firm belief in the long-term future of cryptocurrency.

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