Bitcoin Loads the Balance Sheets of Tesla, Block, MicroStrategy and More

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  • After buying bitcoin up to $60,000, several major companies are in the red on their investments so far
  • Jack Dorsey’s Block and Michael Saylor’s MicroStrategy have underperformed bitcoin this year

Depressed bitcoin markets are weighing heavily on the balance sheets of some of the world’s largest public companies.

Electric car giant Tesla, led by dogecoin bull Elon Musk, is currently down nearly 45% on its bitcoin purchases (if it didn’t sell any after its Q1 disclosure).

Tesla globally acquired 43,200 BTC for $1.5 billion, according to Bitcoin Treasury Bonds The data. Musk’s company stash is now worth less than $844 billion, which is nearly $655 million in losses on paper. Tesla’s balance sheet had $17.55 billion in cash and cash equivalents as of March 31.

The company bought its BTC in the first quarter of 2021, when the top digital asset was on its way to $60,000 for the first time. Tesla bought his BTC for $34,722 on average. Its share price is down 35% since the start of the year.

For scale, the tech-heavy NASDAQ 100, which highlights Tesla, has fallen 29% this year. The broader S&P 500 lost 20% over the same period. Bitcoin shelled nearly 60% from $47,700 to $20,000 as of 3 p.m. ET.

Meanwhile, Jack Dorsey’s payments provider Block (formerly Square) is in the red around 30% on its bitcoin. Block bought 8,027 BTC for $220 million in total; it is now worth $157 million, which translates to $63 million in unrealized losses. Block’s balance sheet housed more than $5.3 billion in cash according to its latest disclosure.

Block, which paid an average of $27,407, started buying bitcoin in October 2020, when it published his stoic white paper on bitcoin investing. The company’s flagship offering, Cash App, supports bitcoin, although Block generates little profit on these transactions.

“Given the rapid evolution of cryptocurrency and the unprecedented uncertainty from a macroeconomic and monetary regime perspective, we believe the time is right for us to expand our largely USD-denominated balance sheet and make a meaningful investment in bitcoin,” Block wrote at the time. . Block’s stock price has fallen 60% this year.

MicroStrategy, the third-largest listed stock with a bitcoin balance sheet, is down 36% on its BTC. Michael Saylor’s data intelligence firm, which drew criticism from analysts for doubling down last week, has by far the largest BTC treasury of any public company – three times Tesla’s haul.

Saylor spent nearly $4 billion on 129,698 BTC for MicroStrategy, having raised much of that money by selling corporate bonds. On average, the company spent $30,655 per BTC. MicroStrategy stock is down 70% so far this year. It declared less than $93 million in cash and cash equivalents at the end of March.

MicroStrategy also took $205 million bitcoin ready from crypto-specialty bank Silvergate in March, when BTC was worth around $40,000. A drop below $21,000 technically puts it close to a margin call, warned Phong Le, chief financial officer of MicroStrategy, on a conference call in May.

In total, Tesla, Block, and MicroStrategy have lost $2.16 billion on their bitcoin investments to date.

Strong profits outside of crypto mean gains for the Japanese game maker

Another top bitcoin hoard belongs to Chinese photo app publisher Meitu, which is incorporated in the Cayman Islands.

The Hong Kong-listed company unexpectedly spent $49.5 million on bitcoins between March and April 2021, just in time for Beijing’s sweeping cryptocurrency decisions, including restrictions on mining. proof of work that BTC relies on.

Meitu’s BTC is now worth just $18.4 million, down 63% after acquiring 941 BTC for an average price of $52,604.

The company also purchased 31,000 ETH for a total of $50.5 million, an average of $1,630 per token. Its ether reserve is currently valued at $34.4 million, representing a 32% write-down.

Meitu, which maintains a market value of $522 million, has not sold any of its cryptocurrencies, according to its latest filings. This job up to $52 million in losses as a result. Meitu’s stock price is down 33% this year.

Japanese mobile game maker NEXON and Norwegian crypto unit Seetee (a subsidiary of industrial investment firm Aker) are also down considerably on their bitcoin, having lost 66% and 63% respectively on paper losses. worth $102 million, according to data from Bitcoin Treasuries.

The share price of Seetee’s parent company, Aker, is down less than 15% in 2022, although crypto accounts for only a small portion of its total investments through its subsidiary.

NEXON goes completely against the trend. The Tokyo-listed stock is actually up 21% so far this year, propelled by strong earnings in the first trimester.

Shorting Bitcoin Stocks Could Be Riskier Going Forward

Indeed, maintaining crypto exposure on balance sheets has been risky this year. Short sellers surrounded MicroStrategy and Coinbase, as well as a series of Bitcoin mining stocks such as Marathon and Riot Blockchain.

The latest short interest data (which tracks how many of the company’s outstanding shares have been sold short) was released on June 15, with no update until next Tuesday. Yet the most recent data showed that Coinbase’s short-term interest has increased by 15% since May 31; That of Marathon had jumped 21%.

MicroStrategy – the company with the largest bitcoin cash holdings – saw its short interest jump nearly 7% over the same period, with more than 43% of float shorted, according to figures provided by data startup quantX.

“Shorting MicroStrategy will get risky at some point,” said quantX founder Oisin Maher, who noted that shorting crypto stocks is already dangerous because the time to hedge (the number of days it takes to unwind short positions) seems to have increased considerably.

In contrast, the block’s short interest has actually fallen, to 8% of free float. Tesla’s short-term interest also seemed unaffected, hovering around 3%.

Still, Maher relayed that the Coinbase and Marathon bond markets looked extremely fragile. “General sentiment toward crypto is unclear, but sentiment toward some institutions is clearly still very bad. The bond data doesn’t lie,” Maher said.


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  • David Canellis

    blockages

    Editor

    David Canellis is an Amsterdam-based editor and journalist who has covered the crypto industry full-time since 2018. He has a strong focus on data-driven reporting to identify and map trends within the ecosystem, from bitcoin to DeFi, from crypto stocks to NFTs and beyond. Contact David by email at [email protected]

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