Hong Kong tech giant Meitu made headlines in April 2021 after it reported nearly $100 million in crypto holdings. However, with the onset of the bear market, the tech company lost nearly half the valuation of its crypto holdings.
According to a local media report, Meitu has reported an impairment loss of more than 300 million yuan ($43.4 million) on its crypto holdings. An impairment loss is a loss in the value of an asset when it falls below the carrying amount of the investment.
The financial filing revealed that the impairment loss had more than doubled from last quarter, something the company had been expecting. The tech giant said its crypto holdings could affect the company’s net loss by the end of the first half of the year.
In a July exchange filing, Meitu reported cryptocurrency holdings of approximately 940 bitcoin (BTC) and 31,000 ether (ETH), purchased for $49.5 million and $50.5 million, respectively. The company reported a net crypto investment of about $100 million, and the company lost nearly half of its investment valuations by the end of the second quarter of 2022, due to the current downturn in the cryptocurrency market.
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Meitu is not the only company that has incurred significant losses on its crypto investment. MicroStrategy, the flag-bearer of public companies investing in Bitcoin, has reported an impairment loss of more than $900 million on its BTC holdings as of the second quarter of 2022.
At the height of the cryptocurrency’s rally last year, MicroStrategy led by Michael Saylor popularized the use of BTC as a treasury reserve to replace a portion of the US dollar. The idea gained so much traction that BTC was hitting a new all-time high every month, and the likes of Tesla, SpaceX, and more than a dozen public companies joined the bandwagon. However, Bitcoin is down more than 70% from its all-time high and is currently trading at a third of its all-time high.