It purchased another $17 million in Bitcoin and became the first public company to put Ethereum on its treasury books.
Buying Bitcoin…and Ethereum
You may have not heard of Meitu yet, but the Chinese photo app is making quite the ripples on the online Ethereum community.
The Chinese photo editing app is listed on the Hong Kong Stock Exchange and is popular in Mainland China among millennials seeking to make their pictures more beautiful. And on March 5, 2021, it disclosed holding over $40 million worth of the world’s largest cryptocurrencies.
“The Group has purchased 15,000 units of Ether and 379.1214267 units of Bitcoin (“BTC”), both cryptocurrencies, in open market transactions at an aggregate consideration of approximately US$22.1 million and US$17.9 million respectively, on March 5, 2021,” the firm said.
It added that the purchases were made pursuant to a “cryptocurrency investment plan” previously approved by the board of directors of the company under which Meitu may make a net purchase of up to $100 million worth of various cryptocurrencies. The money for the purchases comes solely from its existing cash reserves and “other remaining proceeds” from its 2016-initial public offering (IPO).
Hong Kong Listed Company Meitu announced that the Company has bought 380 BTC ($17.9mil) and 15,000 ETH ($22.1mil) from open market on March 5, 2021.
The virus is spreading 🚀 pic.twitter.com/g6y0KeBLgU
— frxresearch (@frxresearch) March 7, 2021
As per official figures, Meitu made yearly profits of over $107 million last year, mainly from selling advertisement spots on its app. The firm has no other significant sources of profit, but the crypto purchase could be a means to that.
Meitu officials said they expect cryptocurrencies to increase in value in the coming times. They further explained their move to branch away from holding cash as an asset:
“The Board believes cryptocurrencies have ample room for appreciation in value and by allocating part of its treasury in cryptocurrencies can also serve as a diversification to holding cash.”
Money printing led to move
Meitu said cash was subject to depreciation due to aggressive increases in money supply by central banks globally in their treasury management. This was a reference to the rampant and incessant money printing done by central governments in the past year—one that market observers say would lead to inflation and a drastic effect on the overall economy.
Meanwhile, the move comes on the back of several companies and investors around the world turning to cryptocurrencies to protect from a bleak economic outlook and fears of overinflation in the coming years.
And while most businesses have stuck with Bitcoin. Meitu’s purchase shows firms aren’t shying away from Ethereum either.