The Hong Kong-listed photo-editing software developer Meitu, for the six months ended, announced a loss of $45.6 million from the revaluation of its cryptocurrency reserves.
The firm expects a net loss for the period in the range of $41.1 million to $52.3 million.
In March and April 2022, the company acquired in total ~940.89 BTC and ~31,000 ETH. The firm spent on purchasing the digital assets ~$49.5 million and ~$50.5 million respectively.
Since the acquisition, Meitu has not sold the cryptocurrencies in accordance with the board’s investment policy.
Despite impairment losses as of June 30, the board stressed:
- The acquisition of cryptocurrency did not have a material impact on cash flows, operations, or adjusted profit and loss.
- The interim results are reversible in the event of subsequent increases in digital asset prices.
Meitu noted that cryptocurrencies are still in the early stages of development relative to other asset classes, and therefore prices are “prone to volatility”.
“The board believes that further adoption provides ample room for growth, given that the blockchain industry is rapidly developing and cryptocurrencies are an integral part of it,” the company said.
The board stressed that it considers the recent volatility of Bitcoin and Ethereum prices to be temporary and is confident in the “long-term prospects for cryptocurrency prices.”
The board also reminded investors that digital assets account for only a portion of the company’s reserves.
For the first quarter, Meitu’s impairment from revaluation of its owned cryptocurrency amounted to $2.6 million.
In June, the analytics software provider MicroStrategy’s “paper” losses from held Bitcoin exceeded $1bn. However, by the end of the month, the company holding 129,218 BTC bought another 480 BTC for $10 million.
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