Bitcoin strains the balance of Tesla, Block, MicroStrategy and more

Depressed bitcoin markets weigh 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 did not sell any after the first quarter revelation).

Tesla has bought a total of 43,200 BTC for $ 1.5 billion, according to Bitcoin Treasuries data. Musk’s corporate holdings are now worth less than $ 844 billion – representing almost $ 655 million in paper losses. Tesla’s balance sheet contained $ 17.55 billion in cash and equivalent as of March 31.

The company bought its BTC during the first quarter of 2021, when the best digital asset was heading for $ 60,000 for the first time. Tesla raised its BTC to $ 34,722 on average. The share price has fallen 35% so far this year.

For scale, the technology-heavy NASDAQ 100, which prominently owns Tesla, has fallen 29% this year. The wider S&P 500 has fallen 20% in the same period. Bitcoin has bombed almost 60%, from $ 47,700 to $ 20,000 from 15 ET.

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

Block, which paid an average of $ 27,407, began buying bitcoin in October 2020, when it published its stoic Bitcoin Investment Whitepaper. The company’s flagship offering the Cash App supports bitcoin, although Block generates little profit from these transactions.

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

MicroStrategy, the third largest listed stock with bitcoin balance, is down 36% on BTC. Michael Saylor’s data intelligence company, which received criticism from analysts for doubling last week, boasts by far the largest BTC cash register of a public company – three times Tesla’s move.

Saylor spent close to $ 4 billion on 129,698 BTC for MicroStrategy, after raising a large portion of these funds by selling corporate bonds. On average, the company spent $ 30,655 per BTC. The MicroStrategy stock has collapsed 70% so far this year. It reported less than $ 93 million in cash and equivalents at the end of March.

MicroStrategy also took out a $ 205 million bitcoin-backed loan from the cryptocurrency-focused bank Silvergate in March, when BTC was worth around $ 40,000. A fall below $ 21,000 technically puts it near a margin call, warned MicroStrategy CFO Phong Le at the May conference.

Together, Tesla, Block and MicroStrategy are down $ 2.16 billion on their bitcoin investments to date.

Strong earnings outside crypto mean gains for Japanese game maker

Another prominent bitcoin treasure trove belongs to the Chinese photo app publisher Meitu, which is incorporated in the Cayman Islands.

The Hong Kong-listed company unexpectedly spent $ 49.5 million on bitcoin between March and April 2021, just in time for Beijing’s extensive decisions on cryptocurrencies, including restrictions on Proof of Work mining on which BTC depends.

Meitus BTC is now worth just $ 18.4 million, down 63% after buying 941 BTC at an average price of $ 52,604.

The company also bought 31,000 ETH for a total of $ 50.5 million, averaging $ 1,630 per token. The ethereal stock is currently valued at $ 34.4 million, representing 32% depreciation.

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

The Japanese mobile game manufacturer NEXON and the Norwegian crypto unit Seetee (a subsidiary of the industrial investment company Aker) are also significantly declining on bitcoin, having lost 66% and 63% respectively for paper losses worth $ 102 million, per Bitcoin Treasuries data.

Seetee mother Aker’s share price is down less than 15% in 2022, although crypto makes up a small part of the total investments via the subsidiary.

NEXON completely counteracts the trend. The Tokyo-listed stock is actually up 21% so far this year, driven by strong earnings in the first quarter.

Shorting bitcoin stocks may be more risky going forward

In fact, it has been difficult to maintain crypto exposure on the balance sheets this year. Short sellers have revolved around MicroStrategy and Coinbase, as well as a number of bitcoin mining stocks such as Marathon and Riot Blockchain.

The latest short-term interest rate data (which tracks how many outstanding company shares have been shorted) was published on 15 June, with no updates before next Tuesday. Nevertheless, the latest data showed that Coinbase short-term interest rates have risen 15% since 31 May; Marathon had increased by 21%.

MicroStrategy – the company with the largest bitcoin tax – saw its short-term interest rate jump almost 7% in the same period, with more than 43% of the floating card shorted, according to figures provided by data startup quantX.

“Shorting MicroStrategy will be risky at some point,” said quantX founder Oisin Maher, noting that shorting cryptocurrencies is already dangerous, as the time to cover (the amount of days required to close short positions) seems to have taken off. significantly up.

On the other hand, the block short interest rate actually fell 4.5% to 8% of the flow. Tesla’s short-term interest also seemed unaffected, fluctuating around 3%.

Nevertheless, Maher said that the bond markets for Coinbase and Marathon looked extremely volatile. “General sentiment against crypto is unclear, but sentiment against certain institutions is clearly still very poor. Bond data is not lying,” Maher said.

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