In a striking example of corporate cryptocurrency adoption, a Hong Kong-listed company with a market capitalization of approximately $230 million now holds Bitcoin assets valued at around $226 million. This significant investment highlights a growing trend of firms integrating digital assets into their treasury management strategies.
Strategic Moves into Digital Assets
The company behind this substantial crypto portfolio is Boyaa Interactive, a game developer established in 2004, best known for its online chess and card games. Listed on the Hong Kong Stock Exchange since November 2013, Boyaa has taken an assertive approach to digital asset acquisition.
In a recent disclosure dated November 12, the company revealed it holds 2,641 Bitcoin with a total acquisition cost of approximately $143 million, averaging about $54,000 per coin. Additionally, Boyaa holds 15,400 Ethereum tokens purchased at an average cost of $2,756 each, with a total investment of nearly $42.6 million.
With the recent surge in cryptocurrency markets that saw Bitcoin approach $90,000 and Ethereum exceed $3,440, the company's combined holdings in these two digital assets alone have generated unrealized gains exceeding $100 million.
The Web3 Expansion Strategy
Boyaa Interactive has positioned its cryptocurrency acquisitions as integral to its broader business strategy. The company stated: "Purchasing and holding cryptocurrencies is an important initiative for the Group's Web3 business development and layout, and also an important part of the Group's asset allocation strategy."
The company began its digital asset journey in 2023. By year-end, its cryptocurrency holdings were valued at approximately $7.86 million. This figure grew dramatically to about $168.8 million by mid-2024, representing 75% of the company's total assets and over 90% of its current assets.
According to half-year reports, Boyaa's digital asset portfolio primarily consists of Bitcoin, Ethereum, and Tether. By June 30, the company held approximately 2,079 Bitcoin with an average cost of $51,300 per coin—having acquired 885 Bitcoin in the second quarter alone. Its Ethereum holdings remained steady at about 15,300 tokens.
The company's significant profit growth during the first half of the year was largely attributable to the increased fair value of these digital assets. Boyaa reported digital asset fair value gains of approximately $24.57 million, accounting for 87% of its net profit attributable to shareholders.
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Recent Acquisition Patterns and Market Conditions
Between July and August 2024, Boyaa continued accumulating Bitcoin, increasing its holdings to approximately 2,410 coins by August 22, with an average cost of $51,900 per coin. During this period, the company maintained its Ethereum position without additional purchases.
The pace of Bitcoin acquisition has slowed in recent months, likely reflecting the cryptocurrency's rising price. The recent market surge has been partly attributed to investor speculation that potential political changes in the United States might create a more favorable regulatory environment for digital assets.
Bitcoin achieved a milestone on November 10, breaking through the $80,000 barrier for the first time in history. By November 12, the cryptocurrency reached approximately $86,900 per coin.
Shareholder Returns and Dividend Policy
In a move that aligns its cryptocurrency success with shareholder benefits, Boyaa announced a new dividend policy in March 2024. The company committed to distributing no less than 20% of its annual operating net profit to shareholders over the next five years. Additionally, it pledged to distribute no less than 5% of the increased value derived from its cryptocurrency investments annually.
This policy represents a significant development for a company that, despite initial market excitement during its IPO—which attracted nearly 77,000 subscribers and frozen funds of HK$86.8 billion—has generally experienced subdued stock performance and low daily trading volumes. Since March 2024, however, increased trading activity has been observed, likely influenced by both improved financial performance and the company's prominent cryptocurrency investments.
Other Companies Embracing Crypto Assets
Boyaa Interactive is not alone among Hong Kong-listed companies in embracing cryptocurrency investments:
- In March 2024, Inkeverse Group approved a $100 million budget for cryptocurrency acquisitions over the next five years on regulated and licensed trading platforms.
- Between March and August 2024, Value Holdings purchased Bitcoin worth HK$36 million (excluding transaction costs).
- LKG Games reported in its 2024 interim results that it held 142.8539 Bitcoin and 848.386 Ethereum, acquired at a total cost of approximately $8.8 million.
- Canaan Inc., often called "the first blockchain stock," held 1,133.5 Bitcoin with a fair value of $69.9 million as of June 30.
Mainland Chinese companies have been more cautious in their approach to cryptocurrency investments, reflecting different regulatory environments. In August 2024, Zhidu Holdings disclosed that it accounts for Bitcoin as an intangible asset measured at cost. As of December 31, 2023, the company's Bitcoin holdings were valued at approximately $5.65 million on its books. The company sold some Bitcoin in the first quarter of 2024 but confirmed in early November that it still maintains a position.
This cautious approach aligns with guidance issued by the People's Bank of China and four other government agencies in December 2013, which stated that Bitcoin is not a currency and should not be circulated as such in the market. The notice explicitly prohibited financial institutions and payment organizations from conducting Bitcoin-related business.
According to Zhidu's periodic reports, the company's Bitcoin holdings were acquired by its subsidiary Zhidu Hong Kong through cloud mining services purchased outside mainland China.
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Frequently Asked Questions
Why would a game company invest so heavily in cryptocurrencies?
Companies like Boyaa Interactive view cryptocurrency acquisition as both a strategic Web3 expansion move and a treasury management strategy. Digital assets can provide diversification benefits and potential appreciation beyond traditional investments.
How do companies account for cryptocurrency on their balance sheets?
Accounting treatment varies by jurisdiction and accounting standards. Some companies classify cryptocurrencies as intangible assets measured at cost, while others use fair value accounting. The appropriate classification depends on how the assets are held and used.
What risks do companies face when holding significant cryptocurrency?
Corporate cryptocurrency holdings carry several risks including price volatility, regulatory uncertainty, cybersecurity threats, and accounting complexities. Companies must implement robust security measures and risk management frameworks.
Are many public companies investing in cryptocurrency?
While still a minority practice, an increasing number of public companies are allocating portions of their treasury to cryptocurrencies. Most adopt a cautious approach, with only a few companies making significant allocations like Boyaa Interactive.
How do regulatory differences affect corporate crypto investments?
Regulatory environments significantly impact corporate cryptocurrency strategies. Companies operating in jurisdictions with clear regulatory frameworks tend to be more active, while those in restrictive environments often limit or avoid such investments.
What considerations should companies evaluate before investing in crypto?
Companies should consider their risk tolerance, investment objectives, regulatory compliance requirements, security capabilities, and accounting implications before allocating funds to cryptocurrency investments.