During last year’s cryptocurrency rally, Bitcoin reached the $50,000 level for the first time and exceeded many expectations. As a result, many investors bought bitcoin at that time. Hong Kong tech giant Meitu was one of the companies that took bitcoin as a treasury reserve.
With the market downturn, the tech giant suffers double losses. This is a type of loss where the value of the asset is less than the book value of the investment.
Bitcoin lost more than 50% of its value in the second quarter of 2022, which is the worst quarterly performance of BTC since the third quarter of 2011. The decline in the value of BTC is devastatingly affecting many investors.
Meitu has lost nearly half of its crypto value in the emergence of a bear market this year. However, the tech company made headlines in April 2021 after that It said Purchase of approximately $100 million worth of crypto holdings.
Meitu’s Crypto contract collapse
local media a statement Meitu statement regarding BTC contract. According to the report, the company lost more than 300 million yuan, worth nearly $43,400 million, in cryptocurrency investments.
Remember, Meitu revealed its crypto holdings to be around 940 BTC and 31,000 ETH during an exchange filing in July. The purchase amount for both tokens is $49.5 million and $50.5 million. This made the company’s net crypto investment $100 million.
However, the company lost nearly half of the investment value by the second quarter of 2022 due to the recent decline in the cryptocurrency market. In addition, the financial filing revealed that the impairment loss more than doubled compared to the previous quarter, as predicted by Meitu earlier.
Also, the company said that the loss of value of cryptocurrency holdings would bring more drastic effects on its performance. As a result, this could result in a net loss for the company in its second quarter report.
MicroStrategy, Tesla, and others suffered losses
Besides Meitu, other notable companies have suffered notable losses through crypto investments. For example, MicroStrategy, the leading public company investing in Bitcoin, reported an impairment loss. The company announced a loss of more than $900 million in its bitcoin holdings by the second quarter of 2022.
During the height of the rally last year, Microstrategy, led by Michael Salor, used bitcoin as a treasury reserve. This move made Bitcoin gain popularity on the US dollar. The idea became very attractive when Bitcoin was climbing an entirely new time-high every month.
Companies like SpaceX, Telsa, and dozens of others have joined the trend. However, the bubbles were broken with the advent of the bear market as the price of Bitcoin plummeted. As a result, Bitcoin has fallen from the top and is now trading at a third of its previous highest value.
Featured image from Pixabay, chart from TradingView.com