From retail investors to institutions, uncovering the Bitcoin investment frenzy among listed companies.
Article Author: Ada, MetaEra
Source: MetaEra
On December 5, 2024, Bitcoin surpassed $100,000, and the cryptocurrency market was filled with cheers. The prediction made by Kong Jianping, founder of Nano Labs (Haowei Technology, Nasdaq: NA), about Bitcoin reaching $100,000 years ago was validated on this day.
On the same day, Nano Labs announced that it would open a trading account on the licensed Hong Kong exchange HashKey Exchange and plans to invest $50 million in Bitcoin virtual assets. Nano Labs' stock price also rose from $6 per share in early November to nearly $13 per share at the close on December 5.
Kong Jianping stated in an interview with MetaEra that Bitcoin has now entered a new stage. It has shifted from being an investment target for retail investors to becoming a reserve asset for some institutions or governments. He believes that the risk of listed companies holding Bitcoin has now reached an acceptable level and can bring good return prospects for companies. This is also one of the motives behind Nano Labs' announcement of Bitcoin investment. 'We will hold Bitcoin for the long term,' said Kong Jianping.
Since the beginning of this year, Bitcoin has risen over 140%. Trump's victory in the U.S. election and his friendly attitude towards the cryptocurrency industry have catalyzed this surge. Behind the enormous influence and discussion, the boundaries of Bitcoin are continuously expanding.
An increasing number of listed companies are allocating Bitcoin as a reserve asset, a trend that is spreading from American companies to Chinese listed enterprises. According to incomplete statistics, there are currently over 60 listed companies worldwide holding varying amounts of Bitcoin.
As the popularity of Bitcoin continues to rise, discussions surrounding listed companies' Bitcoin reserves are also increasing. What are the motivations for listed companies to hold Bitcoin? How should listed companies respond to the risks brought by Bitcoin's volatility? What kind of holding strategy should listed companies adopt?
Listed companies are competing to purchase Bitcoin.
In this global wave of 'currency hoarding', the American listed company MicroStrategy is undoubtedly at the forefront of this trend.
As early as 2020, its founder Michael Saylor announced that Bitcoin would be part of the company's assets. At that time, it marked the beginning of MicroStrategy's 'Bitcoin strategy'.
The 'Bitcoin strategy' has brought MicroStrategy gains in both stocks and coins. So far, its stock price has risen by up to 3000%, with a market cap exceeding $100 billion at one point. As Bitcoin breaks through $100,000, MicroStrategy's total return on Bitcoin has also reached 63.3% since the beginning of the year.
Stimulated by significant economic benefits, several U.S. listed companies have begun to emulate MicroStrategy's Bitcoin strategy, treating Bitcoin as a reserve asset.
According to Bitcoin Treasuries data, since November, fitness equipment manufacturer Interactive Strength announced an investment of $5 million to purchase Bitcoin; artificial intelligence company Genius Group spent $14 million to buy 153 Bitcoin; medical company Semler Scientific approved an investment plan for 1,570 Bitcoin, in addition to several other companies like Rumble, Anixa Biosciences, and LQR House joining the Bitcoin investment ranks.
In addition to investing in Bitcoin, the e-commerce platform LQR House Inc. (LQR) also accepts cryptocurrency payments on CWSpirits.com, allowing customers to flexibly use digital currency to purchase alcoholic beverages. As part of this plan, LQR House has implemented a policy to retain cryptocurrency payments of up to $10 million as Bitcoin.
The Bitcoin investment craze quickly spread to Chinese listed companies.
In addition to Nano Labs mentioned earlier, the Chinese concept stock SOS Ltd has also invested in Bitcoin. It announced an investment of $50 million to purchase Bitcoin. Other Chinese listed companies such as Boya Interactive, Coolpad Group, Guofu Innovation, and NetDragon also joined the ranks of Bitcoin investment.
It is worth mentioning that the Hong Kong-listed company Boya Interactive converted its reserves of Ethereum valued at $49.48 million into Bitcoin between November 19 and November 28, ultimately obtaining 515 Bitcoin. This decision resulted in Boya Interactive's Bitcoin holdings reaching 3,183 units, surpassing the previous holder, Japan's listed company Metaplanet, which was regarded as Asia's 'MicroStrategy'.
According to the latest news from MetaEra, as of December 12, 2024, Nano Labs has cumulatively held about 360 Bitcoin, with a total value of approximately $36 million based on current prices. According to Coingecko data on December 12, this holding ranks 21st among listed companies by the number of BTC held.
According to Kong Jianping's observations, listed companies holding Bitcoin can be categorized into three main types: first, native cryptocurrency companies or those involved in Web3 projects, which have cryptocurrency-related businesses in their main segments; second, enterprises in the Crypto Miner ecosystem, which tend to hold Bitcoin long-term, such as Canaan and The9; third, some tech, gaming, or internet companies that cross-hold Bitcoin as part of their asset portfolio, such as Boya Interactive and Meitu.
Kong Jianping believes that holding Bitcoin among listed companies will be a long-term trend. Regarding holding strategies, he stated that Bitcoin should be allocated and held without affecting the company's cash flow. 'This way, the short-term volatility of Bitcoin will not have a substantial impact on the company's operations,' said Kong Jianping.
At the same time, Nano Labs' strategic reserve of Bitcoin has also been recognized. Recently, Nano Labs announced a financing plan totaling $36.25 million, with participants including Fenbushi Inc -US, Longling Capital, and Golden Forest Management Limited.
Will it be held long-term?
On the evening of December 4, Meitu announced on the Hong Kong Stock Exchange that it sold all its cryptocurrencies, including approximately 31,000 Ether and 940 Bitcoin, making a profit of about $79.63 million (equivalent to approximately 571 million RMB).
Meitu's first purchase of cryptocurrency was in March 2021. Over the past three years, its investment return in cryptocurrency has been about 44%. Although Meitu has made significant profits from its investments, it has also attracted considerable controversy.
According to reports from The Paper, many netizens have a negative attitude towards Meitu's purchase of digital currency. Some analysts believe that Meitu's short-term behavior is 'not focused on its core business' and has speculative implications.
In Kong Jianping's view, whether listed companies allocate Bitcoin for short-term speculation or long-term holding, it indicates that the market has a hot spot, and fundamentally, it promotes Bitcoin and the Web3 sector, which is beneficial for the overall development of this area.
Nano Labs prefers to hold Bitcoin for the long term. 'We do not make short-term investments because I am optimistic about Bitcoin's long-term value,' said Kong Jianping. 'Compared to gold, Bitcoin aggregates the world's network effects and liquidity, while also having technological attributes. In the past, gold was the world's value anchor because during the Industrial Revolution, everyone needed an equivalent across the globe. However, with the advent of the information age, gold is becoming less applicable. In the future, with the arrival of the digital age and the era of artificial intelligence, we need a new value anchor, and currently, Bitcoin is the most suitable. However, Bitcoin is not a substitute for gold, but rather a representation of value in another era's dimension.'
Currently, the cryptocurrency market is entering a new round of growth. 'There were many challenges previously, including lack of recognition from governments, regulators, banks, etc., but with Trump's rise to power, the whole world has become increasingly friendly towards this sector,' said Kong Jianping. 'At present, we are facing more cognitive challenges rather than external ones.'
In the future, as the regulatory frameworks for virtual assets are gradually improved by governments around the world, the compliance path for listed companies holding Bitcoin will become clearer.
