Hong Kong-listed photo processing software developer Meitu reported a half-year loss of $45.6 million from the revaluation of cryptocurrency reserves.
The firm expects a cumulative net loss for the period of between $41.1 million and $52.3 million.
In March and April 2022, the firm purchased a total of ~940.89 BTC and ~31,000 ETH. The firm spent ~$49.5 million and ~$50.5 million on digital asset purchases, respectively.
Since the acquisition, Meitu has not sold cryptocurrencies as per the investment strategy adopted by the board.
Despite losses from asset depreciation as of June 30, the company’s board emphasized
- the cryptocurrency purchase had no material impact on cash flows, operations, and adjusted profit/loss;
- interim results are reversible at year-end in the event of a subsequent rise in digital asset prices.
Meitu noted that cryptocurrencies are still in their early stages relative to other asset classes, and therefore prices are “prone to volatility.”
The board stressed that it considers the recent volatility in bitcoin and Ethereum rates to be temporary and is confident in the “long-term growth prospects for cryptocurrency prices.”
The board also reminded investors that digital assets account for only a portion of the company’s reserves.
At the end of the first quarter, Meitu’s loss from the revaluation of cryptocurrency owned by it was $2.6 million.
Recall that analytics software provider MicroStrategy’s “paper” losses from bitcoin holdings exceeded $1 billion in June, but the company, which owned 129,218 BTCs, bought another 480 BTCs for $10 million at the end of the month.
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