37 listed companies hold nearly $9 billion in Bitcoin, some lose $22 million and some earn more than $2 billion

Cailian Press | Blockchain Daily (Hangzhou, reporter Xu Cihao) reported that on August 11th a year ago, Microstrategy, a US-listed company, announced its first purchase of BTC. Since then, it has purchased 14 times, an average of once every 3.7 weeks. Since the announcement of its investment in Bitcoin, MicroStrategy's stock price has risen by 448%, and it has accumulated 105,085 BTC. Now it has acquired 0.56% of the global Bitcoin supply.

Microstrategy is not the only company holding Bitcoin. Data from OKLink blockchain browser shows that there are currently 37 listed companies holding Bitcoin in the world, holding nearly 200,000 Bitcoins in total, with a total market value of nearly US$9 billion.

But not all listed companies are as lucky as Microstrategy, which made more than $2 billion by investing in Bitcoin. According to statistics from the Blockchain Daily, 7 of the 37 listed companies that hold Bitcoin are currently losing money on the Bitcoin they bought.

An industry insider analyzed to the Blockchain Daily reporter that the price volatility of Bitcoin is more intense than that of traditional stocks. If a listed company without relevant knowledge and background invests in Bitcoin, it is tantamount to gambling.

Heavily invested in Bitcoin and earned more than $2 billion in one year

On August 11, 2020, MicroStrategy, a US listed company, announced the purchase of more than $250 million worth of Bitcoin as part of its asset allocation.

In this regard, MicroStrategy CEO Michael Saylor said, "Bitcoin is digital gold, stronger, faster and smarter than any currency before it. We hope that its value will continue to grow with technological advances, expanded application scope and network effects, which have driven the rise of many category killers in this era."

Since announcing its first purchase of BTC, the company has purchased it a total of 14 times. According to MicroStrategy's second quarter financial report, as of June 30, 2021, MicroStrategy held a total of 105,085 BTC with a book value of US$4.797 billion; the average book value of each Bitcoin was approximately US$19,518, and the holding cost was US$2.7 billion.

According to the first quarter financial report, MicroStrategy only held 91,326 BTC as of March 31; the second quarter financial report showed that MicroStrategy increased its holdings by 13,759 BTC. Specifically, these purchases were completed in four batches: 253 BTC on April 5; 500 BTC on May 13 and 18; and more than 13,005 BTC on June 21.

Due to the decline in BTC prices in the second quarter, BTC assets were also impaired in the financial statements. (According to US accounting rules, when the fair value of digital assets is lower than the book value, the company will be required to recognize impairment losses.)

Data shows that in the second quarter, MicroStrategy's digital asset (BTC) impairment loss was $424.8 million, and the cumulative impairment loss since the purchase reached $689.6 million. According to Tesla's report on Tuesday, its Bitcoin asset impairment in the second quarter was only $23 million. In comparison, MicroStrategy's investment seems to be performing poorly.

It should be noted that MicroStrategy has been raising funds by issuing bonds to purchase BTC from the beginning. Take the increase in positions in June as an example. MicroStrategy issued junk bonds with a total principal of US$500 million, an annual interest rate of 6.125%, and due in 2028. The first maturity date of the bond is June 15, 2022, and payments will be made every six months thereafter. Judging from MicroStrategy's earnings, if the BTC price can stabilize at the current level, there will be no risk of default in subsequent acceptances.

Liu Bin, an expert at the Whale Platform think tank and director of the Financial Research Office of the Shanghai Pudong Institute for Reform and Development, said in an interview with Blockchain Daily that MicroStrategy is more in line with the situation of flooding funds in the United States, and that it can make considerable profits by investing in Bitcoin with funds at a fixed interest rate.

Liu Bin analyzed that MicroStrategy believes that the second quarter is a turning point in the entire market's understanding of Bitcoin, so the company dares to continue to increase its holdings of Bitcoin.

37 listed companies hold Bitcoin

According to OKLink blockchain browser data, there are currently 37 listed companies holding Bitcoin in the world, holding nearly 200,000 Bitcoins in total, with a total market value of nearly US$9 billion. These companies include Tesla and payment giant Square. See the figure below for a detailed list.

In the first half of this year, Meitu, a Hong Kong-listed company, also issued several announcements on the purchase of cryptocurrencies.

Meitu announced on April 8 that its wholly-owned subsidiary Meitu Hong Kong further purchased approximately 175.7 BTC in open market transactions in accordance with the cryptocurrency investment plan, with a total consideration of approximately US$10 million. Earlier, Meituan disclosed in an announcement on March 17 that its wholly-owned subsidiary Miracle Vision further purchased 16,000 ETH and approximately 386 BTC in open market transactions in accordance with the cryptocurrency investment plan, with a total consideration of US$28.4 million and US$21.6 million, respectively, for a total of US$50 million.

On March 7, Meitu also announced that it had purchased 15,000 ETH and 379 BTC in open market transactions, with a total consideration of approximately US$22.1 million and US$17.9 million, respectively, totaling US$40 million.

Adding up the three times, Meitu currently holds more than 940 bitcoins, with an average purchase price of about $52,610, and 31,000 ethers, with an average purchase price of about $1,629. Currently, Meitu's total investment in the cryptocurrency market has reached $100 million.

Wang Haifeng, a senior researcher at OKLink Research Institute, said in an interview with the Blockchain Daily that the global macroeconomic situation has undergone profound changes since 2020. In order to cope with the economic recession caused by the epidemic, the United States has generally adopted extremely loose monetary policies, which has pushed up market inflation expectations. In order to avoid the risk of nominal principal loss, investors' demand for hoarding cash has naturally evolved into demand for gold and gold substitutes - Bitcoin.

Wang Haifeng pointed out that currently encrypted digital assets are gradually getting rid of the labels of "niche" and "geek". Just as more and more listed companies are beginning to hold Bitcoin, in the future, encrypted assets such as Bitcoin will be accepted by more institutions and the public, whether as "digital gold" or a "payment tool."

However, among the 37 listed companies counted by OKlink, 7 companies, including Nexon Co Ltd, are currently in the red. As of today (12th), the price of Bitcoin is about $45,000. Nexon Co Ltd has lost nearly $22 million since buying Bitcoin in April, while Meitu has lost about $6 million in Bitcoin.

Liu Kai, partner of Hangzhou Dongyuan Equity Investment, told the Blockchain Daily reporter that the price volatility of Bitcoin is more intense than that of traditional stocks. If companies and institutions without relevant knowledge and background invest in Bitcoin, it is tantamount to gambling.