- Software company Meitu is facing an impairment loss of over $17 million on its Bitcoin holdings.
- However, the firm is not planning on parting ways with its cryptocurrency any time soon.
Hong Kong-based software company Meitu bought 941 collective tune of $100 million. and 31,000 this March and April to the
By the end of Q2, however, the slipped to $32.2 million. had dropped from over $50,000 to around $35,000, and the fair value of Meitu's Bitcoin investment had
Based on rules governing a company’s intangible assets—like Bitcoin and Ethereum—if the value of those holdings decreases since the time of purchase, a company would have to file it as a loss on their financial statements.
“Consequently, the decrease in fair value of the acquired Bitcoin as at June 30 in the amount of $17.3 million is expected to be recognised as an impairment loss,” the firm said in a statement.
Meitu’s crypto impairment loss
Rules governing the holding of intangible assets are hard on companies.
If, hypothetically, Meitu’s Bitcoin had increased in value since the time of the company’s investment, because it is classed as an intangible asset, the company could not list it as a profit.
The only way the company could profit from its intangible assets would be to sell them. And right now, Meitu has no intention of selling its crypto.
“Since the cryptocurrency acquisitions, the group has neither acquired nor sold any cryptocurrencies pursuant to the cryptocurrency investment plan, and there are currently no plans to sell the same in the near future,” the company said.
However, it’s not all bad news for Meitu. The company’s Bitcoin investment might be costing it money, but its Ethereum bet has not been as troublesome.
Meitu has gained $14.7 million on its Ethereum investment—although again, this won’t be listed as any kind of profit until such time as it is sold.
Firms face losses on Bitcoin holdings
Meitu is not the only company that has taken losses due to its Bitcoin holdings in recent months.
According to analysts, Tesla—which bought $1.5 billion worth of Bitcoin in February 2021—could file an impairment loss as big as $100 million over its Bitcoin holdings. The fact that firms are facing these losses is no surprise, given that Bitcoin just registered one of its worst quarterly performances in history.