Canada’s Bitfarms Bought $ 43 Million In Bitcoin In $ 300 Billion Crypto Crash

Top line

Canadian bitcoin mining company Bitfarms announced on Monday that it had invested $ 43.2 million in bitcoin as the cryptocurrency fell about 12% in the first week of the year, becoming the last listed company on the stock market to double in the nascent crypto market despite some experts warning that its volatility makes it an unreliable investment.

Highlights

In a statement on Monday, Toronto-based Bitfarms said it bought 1,000 bitcoins in the first week of January, bringing its holdings to more than 4,300 coins worth around $ 175 million; For comparison, Bitfarms reported revenue of around $ 121 million in the 12 months ending in September.

“With the decline in bitcoin, we have seized the opportunity to transfer money to BTC,” Bitfarms founder and CEO Emiliano Grodzki said in the statement, while adding that the “guiding strategy” of the The business is to accumulate the most bitcoin at the lowest cost and in the fastest time.

Nasdaq-listed Bitfarms shares fell about 4% in pre-market trading after the announcement, roughly following the larger cryptocurrency market’s losses of around 3% in the past 24 hours. .

Bitfarms’ investment comes less than a week after MicroStrategy, the data analytics firm run by Bitcoin bull billionaire Michael Saylor, revealed it bought nearly 2,000 bitcoins for $ 94 million at the start. December, as prices also struggled to recoup losses after a staggering record run. in November.

Bitfarms says it has bought nearly 70% of its total bitcoin holdings since the third quarter of last year, a massive investment that saw stocks skyrocket to 125%, before bitcoin’s plunge in November. does not help bring down the title by more than 50%.

Large number

10 billion dollars. That’s roughly how much about 20 state-owned companies with a market capitalization of over $ 1,000 billion invested in bitcoin, according to London-based crypto firm Nickel Digital Asset Management. MicroStrategy, which owns more bitcoin than any other company in the world, holds around 124,400 coins worth nearly $ 5.1 billion, while Tesla’s roughly 43,200 coins are worth around 1.8 billion dollars. dollars.

Contra

“Bitcoin’s volatility shows that companies cannot rely on cryptocurrencies as strong corporate treasury investments,” wrote Jerry Klein, the managing partner of $ 9 billion Treasury Partners, in a report. -mail to Forbes last month. “Private investors get none of the candy, but all of the indigestion when they invest in bitcoin.” Accounting rules require companies to treat bitcoin as an intangible asset, Klein says, which means companies “have to write down the value if the price drops, but they can’t write it down if the price appreciates.”

Key context

Trading at around $ 40,800 on Monday morning, bitcoin has plunged about 40% from a record high of $ 69,000 in November, as the broader market is in shock at the prospect that central banks are pulling faster than expected from the economic recovery in the pandemic era. “The long-term outlook is still bullish for the two major cryptocurrencies, but the near term looks lousy,” Oanda’s senior market analyst Ed Moya wrote in a weekend note. Despite episodes of intense bitcoin volatility, Goldman Sachs analysts wrote in a note to clients last week that the cryptocurrency could surpass $ 100,000 in the next five years as it increasingly competes. with gold as an inflationary hedge. For now, the latest downside has driven the value of global cryptocurrencies, currently around $ 1.9 trillion, down to over $ 300 billion over the past week.

Further reading

“Looking Ugly”: Crypto Prices Fall Again After $ 300 Billion Sale: How Far Can Bitcoin Go? (Forbes)

Major Cryptocurrencies Including Bitcoin and Ethereum Crash After Fed Minutes Signal Looming Interest Rate Hike (Forbes)

Bitcoin’s Largest Corporate Backer Announces $ 94 Million Investment Amid $ 250 Billion Crypto Market Crash (Forbes)

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