A Hong Kong-listed company with a total market capitalization of approximately $230 million holds Bitcoin assets valued at as much as $226 million.
This firm, Boyaa Interactive, disclosed on November 12 that it currently holds 2,641 Bitcoin, acquired at a total cost of about $143 million, with an average purchase price of around $54,000 per coin. Additionally, the company holds 15,400 Ethereum, purchased for a total of about $42.58 million, averaging $2,756 per token.
With the recent surge in the digital currency market, Bitcoin’s price briefly approached $90,000, while Ethereum exceeded $3,440. At these levels, Boyaa Interactive’s holdings in these two cryptocurrencies alone show an unrealized profit of over $100 million.
Aggressive Move into Crypto Assets
Boyaa Interactive is a gaming company established in 2004, primarily focused on online board and card games. It went public on the Hong Kong Stock Exchange on November 12, 2013.
The company has adopted an assertive strategy regarding digital asset investments. In its official communications, Boyaa stated: “Acquiring and holding cryptocurrencies is a crucial step in our Web3 business development and layout, as well as a significant part of our asset allocation strategy.”
The firm began purchasing digital assets like cryptocurrencies in 2023. By the end of that year, the value of its digital assets stood at approximately $7.86 million. By the end of the first half of this year, that figure had surged to around $168.8 million.
According to its interim report, digital assets now account for 75% of Boyaa’s total assets and over 90% of its current assets.
What’s in Boyaa’s Crypto Portfolio?
Boyaa’s digital asset portfolio mainly consists of Bitcoin, Ethereum, and Tether. As of June 30, the company held about 2,079 Bitcoin, with an average cost of around $51,300 per coin. Notably, it purchased 885 of these Bitcoin in the second quarter alone.
It also held approximately 15,300 Ethereum, acquired at an average price of $2,756 per token.
The substantial increase in the fair value of these digital assets was the primary driver behind Boyaa’s surge in net profit for the first half of the year. The company reported fair value gains of about $245.7 million on its digital assets, accounting for 87% of its attributable net profit.
Since July, Boyaa has continued accumulating more Bitcoin. By August 22, its Bitcoin holdings had increased to about 2,410 coins, though the average cost rose slightly to around $51,900 per coin. Its Ethereum holdings remained unchanged during this period.
However, the pace of its Bitcoin purchases has slowed noticeably over the past two months, likely due to the cryptocurrency’s rising price. The recent rally has been partly attributed to investor speculation that a potential return of Donald Trump to the White House could benefit Bitcoin.
On November 10, Bitcoin’s price broke through $80,000 for the first time in history and has since remained at elevated levels. As of November 12, the price of one Bitcoin reached as high as $86,900.
A Shareholder-Friendly Crypto Dividend Policy
In a notable move, Boyaa Interactive announced a new dividend policy in March of this year. The company committed that over the next five years, it would distribute no less than 20% of its annual operating net profit to shareholders each year.
Additionally, it pledged to distribute no less than 5% of the appreciated value of its cryptocurrency assets annually.
At the time of its initial public offering (IPO), Boyaa attracted significant market attention. Its shares were subscribed by nearly 77,000 investors, with frozen funds totaling HKD 86.8 billion, briefly making it the record-holder for the highest amount of frozen capital in an HKEX listing.
Despite the strong initial interest, the company’s stock performance post-IPO has generally been weak, with low daily trading volume. However, since March of this year, trading activity has increased significantly, driven by improved earnings and its high-profile cryptocurrency investments.
Other Companies Investing in Crypto
Boyaa Interactive is not the only Hong Kong-listed company making substantial investments in cryptocurrencies.
In March, Inke Limited announced that its board had approved a $100 million budget for purchasing cryptocurrencies over the next five years on regulated and licensed trading platforms.
In August, Grand Peace Group disclosed that it had bought Bitcoin worth HKD 36 million (excluding transaction costs) between March and August.
Blue Hat Interactive Entertainment, in its interim results for 2024, reported holding 142.8539 Bitcoin and 848.386 Ethereum, acquired for a total cash consideration of approximately $8.8 million.
Similarly, Canaan Inc., often referred to as “the first blockchain stock,” holds a significant amount of Bitcoin. As of June 30, the company held 1,133.5 Bitcoin, with a total fair value of $69.9 million at that time.
What About Mainland China-Based Listed Companies?
Reports of A-share listed companies in mainland China holding Bitcoin are relatively rare.
In August, Zhidu Holdings indicated on an interactive platform that it accounts for Bitcoin as an intangible asset, initially measured at cost. As of December 31, 2023, the book value of its digital assets (Bitcoin) under intangible assets was approximately $56.47 million.
The company sold some of its Bitcoin in the first quarter of this year but confirmed in early November that it still holds a portion.
It is important to note the regulatory context. In December 2013, the People’s Bank of China and four other ministries issued a notice highlighting that Bitcoin is not a currency and should not be circulated or used as such in the market.
The notice also explicitly required financial institutions and payment agencies not to engage in businesses related to Bitcoin.
According to Zhidu’s periodic reports, the Bitcoin it holds was purchased by its subsidiary, Zhidu Hong Kong, outside mainland China through cloud mining services acquired from related companies.
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Frequently Asked Questions
Why are companies like Boyaa Interactive investing heavily in Bitcoin?
Companies are adding Bitcoin to their treasury reserves as a hedge against inflation and a potential store of value. For some, like Boyaa, it is also a strategic part of their entry into Web3 and digital asset-based business models.
How do companies account for cryptocurrency holdings on their balance sheets?
Accounting treatment varies by region and accounting standards. Some companies classify cryptocurrencies as intangible assets measured at cost, while others may treat them as financial assets at fair value through profit or loss, impacting reported earnings.
Is it legal for companies in China to hold Bitcoin?
While the use of Bitcoin as a currency is prohibited in mainland China, companies may still hold Bitcoin as an intangible asset if acquired through lawful channels outside the mainland, as seen with Zhidu Holdings’ subsidiary.
What risks do companies face by holding large amounts of cryptocurrency?
Primary risks include extreme price volatility, regulatory changes, cybersecurity threats (theft/hacking), and liquidity challenges. These assets can significantly impact a company’s financial stability.
How can investors track a company’s cryptocurrency investments?
Publicly listed companies are required to disclose material investments in their financial statements and annual reports. Look for details in the notes to the accounts sections regarding digital asset holdings.
Are cryptocurrency gains taxed for corporations?
Yes, in most jurisdictions, realized gains on the sale of cryptocurrencies are subject to corporate capital gains taxes. The specific treatment depends on the local tax regulations.