Bitcoin recently achieved a historic milestone, surpassing $100,000 per coin for the first time. This surge has prompted several early investors to capitalize on their holdings, with notable companies making significant financial moves.
Meitu’s Strategic Cryptocurrency Exit
On December 4, Meitu Inc. announced it had sold its entire cryptocurrency portfolio, which included approximately 31,000 Ether and 940 Bitcoin. The transactions yielded a total cash consideration of around $180 million, resulting in a net profit of approximately $79.63 million (about RMB 571 million).
This decision marks a pivotal moment for Meitu, which began accumulating cryptocurrencies in early 2021 as part of a long-term strategic investment.
From Major Losses to Substantial Gains
Meitu first entered the cryptocurrency market in March 2021, purchasing 15,000 Ether and 379.12 Bitcoin for a combined total of $40 million. The company continued to accumulate throughout that year, eventually investing around $100 million in digital assets.
However, the volatile nature of the market led to significant paper losses in 2022 and 2023. At the end of 2022, the fair value of Meitu’s holdings had dropped considerably, leading to impairment losses of RMB 86.6 million for Ether and RMB 198.2 million for Bitcoin.
The market recovery in 2023 allowed the company to reverse some of those losses, and by early 2024, the value of its cryptocurrency assets had finally exceeded their original cost basis.
The recent sale, resulting in a profit of RMB 571 million, exceeds Meitu’s total net profits for both 2022 and 2023 combined.
Allocation of Profits
Meitu has announced plans to allocate 80% of the net proceeds from the cryptocurrency sale toward a special dividend payment to shareholders. The remaining funds will be used for general operational purposes.
Broader Corporate Cryptocurrency Adoption
Meitu’s former chairman, Cai Wensheng, was an early advocate for blockchain technology and digital assets. Under his leadership, Meitu became one of the first publicly listed companies in Hong Kong to add Bitcoin and Ether to its treasury reserve.
Cai famously referred to blockchain as “the biggest bubble in human history,” but also argued that not participating posed an even greater risk.
Boyaa Interactive’ Alternative Approach
Another Hong Kong-listed company, Boyaa Interactive, has also made significant investments in cryptocurrency. As of mid-November, the company held 2,641 Bitcoin and 15,445 Ether, with total acquisition costs of approximately $142 million and $42.6 million, respectively.
Unlike Meitu, Boyaa Interactive has not liquidated its holdings. Instead, the company recently exchanged 14,200 Ether for about 515 Bitcoin, increasing its Bitcoin reserves to 3,183 coins with an average cost of around $57,700 per coin.
At current market prices, Boyaa Interactive is also sitting on substantial unrealized gains.
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Frequently Asked Questions
Why did Meitu decide to sell its cryptocurrency holdings?
Meitu sold its digital assets following Bitcoin's surge to a new all-time high. The company realized significant gains and plans to distribute most of the profits to shareholders as a special dividend.
What was Meitu’s original investment strategy for cryptocurrencies?
Meitu initially acquired Bitcoin and Ether as a long-term strategic reserve, aiming to integrate blockchain technology into its business operations. The investments were part of a broader vision to embrace decentralized technologies.
How do companies account for cryptocurrency investments on their balance sheets?
Companies typically treat cryptocurrencies as intangible assets. They are subject to impairment losses if market values drop below cost, but gains are only realized upon sale, creating accounting asymmetry.
What risks do companies face when investing in cryptocurrencies?
Cryptocurrency investments are highly volatile and subject to regulatory uncertainty, market sentiment shifts, and technological risks. Companies must be prepared for significant value fluctuations.
Did Meitu’s cryptocurrency investments outperform its core business?
Yes, the profit from Meitu’s cryptocurrency sale exceeded the company’s total net profits for the previous two years, highlighting the substantial returns possible in digital asset investments.
Are other companies following Meitu’s example?
While some firms like Boyaa Interactive are actively accumulating cryptocurrencies, others are taking profits or avoiding direct exposure due to the asset class's inherent volatility and regulatory challenges.