“Tesla ran and I ran”: how the reserves of public companies in bitcoins have changed in six months

In 2021, big companies like Tesla and Microstrategy were buying up BTC amid all-time highs. But the crisis broke out, the rate fell by more than three times. How do companies deal with crypto deposits?

Geopolitical crises traditionally develop into economic ones, and 2022 is no exception. And in difficult times, high-risk assets, to which most investors refer to cryptocurrencies, suffer first of all. But there are always two sides in the market: one uses assets to pay off debts, the other buys them in anticipation of future growth.

Against the background of rising prices for raw materials, the leading stock indices retreated from the highs by 20-30%, and cryptocurrencies "formed" almost three times. This caused a chain of bankruptcies of cryptocurrency projects and related companies. In particular, more than 80,000 BTC were sold from the reserves of the Terra project alone, but this did not save either the project or the investors who invested in it.

According to Arcane Research calculations, 236,237 BTC worth almost $5.5 billion have been sold by various legal entities around the world over the past three months. This sale was one of the reasons for the fall of bitcoin below $20,000. But should this be considered the beginning of the end of the presence of bitcoin in corporate reserves? Or is the panic already over?

Bitcoin is now trying to bounce off the bottom around $18,000 reached in June and form an upward correction. But corporations, as a rule, do not pay attention to short-term fluctuations; the general dynamics of the market and the state of their own finances are more important for them.

Which companies bought bitcoin

Public companies whose shares are freely traded on stock exchanges are interesting in that they are required by law to disclose financial statements on a quarterly basis. This is not the whole market, but it is quite a representative slice, allowing one to assess the general mood of the corporate sector. This is especially true for the US and Canada, where the share of public companies is traditionally high.

For the most part, cryptocurrency deposits are held by companies directly related to the blockchain industry. But the hype of 2020-2021 brought large outside investors to bitcoin. Of course, not all transactions took place publicly. The media mainly noted the purchases of cryptocurrency for large amounts, reaching hundreds of millions of dollars. And Microstrategy and Tesla bought BTC for billions. Below are the largest corporate deposits in BTC as of January 1, 2022 and the changes known so far.

microstrategy

One of the largest US financial companies, a developer of strategies and programs for traders, was founded in 1989. Its founder and CEO, Michael Saylor, became a bitcoin maximalist in 2020, and the company began buying BTC. At the same time, Microstrategy does not hold deposits in other cryptocurrencies.

At the beginning of 2022, the company held 124,391 BTC, bought mainly through the issuance of corporate bonds and the sale of shares. Small-value purchases continued throughout the year, although they have declined in recent months.

The first purchase for $425 million took place in October 2020, and in May 2021, Saylor announced that his company already owns 111,000 BTC
and is going to sell them. Since then, purchases have continued in small batches, and even a “paper loss” of more than a billion has not shaken this confidence.

The latest acquisition of 480 BTC for $10 million was announced on June 29th. The total costs of Microstrategy for buying bitcoins are close to $4 billion.

Tesla

The electric car manufacturer began buying bitcoins at the suggestion of its founder, Elon Musk. Musk himself is known to be a fan of Dogecoin, but even he could not convince the board of directors to buy such a frivolous asset. However, with bitcoin it succeeded. As of early 2022, Tesla collectively held 48,000 BTC.

According to the financial statements for the second quarter of 2022, the company sold about 75%, i.e. approximately 36,000 BTC, worth $936 million. Since the total amount of purchases, according to the annual report for 2021, was $1.5 billion, Tesla lost almost $200 million. Unlike Microstrategy's paper losses, this is already a closed deal. Sales seem to have continued in July as Tesla only had 10,725 BTC left according to the latest data.

The reason for the bitcoin sale was not named, but the company has recently experienced difficulties due to broken supply chains and supply disruptions, as a result of which its profit has fallen significantly compared to the first quarter, although it has grown compared to last year. Tesla shares, even with the rebound of recent weeks, have fallen from April highs by almost 25%.

Nexon

Japanese company, developer of mobile games. Bought 717 BTC for $100 million at the peak in April 2021. There is no information about any transactions with these bitcoins and other purchases.

Meitu

A Hong Kong-based company that develops China's popular mobile image editor. Owns 940 BTC, bought for $50M, now worth about $22M.

Cryptocurrency companies and funds

Cryptocurrency companies in the US have begun to enter the stock market more and more often, and more than a dozen are already listed on the Nasdaq. Therefore, cryptocurrencies in corporate reports look more and more familiar. The largest of them:

Galaxy Digital is Michael Novogratz's company, one of the largest investment and trading groups in the cryptocurrency industry. According to the results of the first quarter of 2022, its assets are estimated at $2.5 billion. The company's own reserves in bitcoins are 16,400 BTC.

Coinbase is the largest regulated cryptocurrency exchange in the US. The exchange's own reserves in bitcoins, excluding client deposits, are estimated at 4483 BTC. There was no information about their changes since the beginning of the year. In July, it became known about the SEC investigation into insider trading on Coinbase, as a result of which the shares of the exchange collapsed by 20% in one day. In general, the shares of the exchange have collapsed almost 4 times since the beginning of the year - from $250 to $63.

Block (formerly Square) is a payment processor known for organizing crypto-currency payments, in particular international transfers and solutions for paying salaries in bitcoins. Owns 8027 BTC. Since the company acquired a significant part of the cryptocurrency reserves before the peaks of 2021, they are now in a small minus to the amount of the purchase.

Marathon Digital (formerly Marathon Patent Group) is a patent troll involved in industrial mining. At the beginning of the year, she owned 4813 BTC, the share of purchased and mined is unknown independently. According to the report for Q1 2022, 1258.6 BTC were mined during this period, while showing a net loss of almost $13 million. Some sources mention the figure of 10,055 BTC.

Voyager Digital is a cryptocurrency broker and fund operator. He had a large stake in the failed Three Arrows Capital fund. Due to a chain of bankruptcies caused by the collapse of the Terra and Celsius projects, the company is now itself under external control.

At the beginning of the year, he owned 12,260 BTC, but by July, the reserves had collapsed to 1,239 BTC. This balance is likely to be sold as part of the liquidation and payments to creditors.

Hut 8 Mining is a large mining company that owns several data centers in the US and other countries. In 2018, she entered an IPO, and in 2019 she bought mining assets from Bitfury Group and continues to open new farms. At the beginning of the year, its reserves amounted to 5518 BTC, according to the results of the first quarter of 2022 - 6460 BTC, and at the end of June the company reported holding 7406 BTC. Thus, Hut8 accumulates most of the mined bitcoins.

BTC Corporate Reserve Changes

The political and financial crisis has inevitably changed the attitude of corporate players towards bitcoin as an investment asset. And not everyone was able to keep these reserves. The summary table below shows the reserves of companies in bitcoins for January and the end of July 2022 (according to CoinGecko and other open sources). At the time of publication, many companies have not yet reported for the II quarter. The total amount of Bitcoin held by public companies, including those not listed here, can be as high as 220,000 BTC.

Bitcoin on the balance of states

The state with some assumptions can also be considered a corporation. This "dream corporation" sets its own laws and controls them. Most states routinely disclose budget revenues and expenditures, albeit not to shareholders.

 Until 2021, bitcoins came into the possession of government departments only in the order of confiscation. Subsequently, most of these cryptocurrencies were sold at auctions. Moreover, since bitcoin continues to rise in price in the long term, most bitcoins were sold at auctions at a higher price than they “entered the balance sheet”.

In the United States in 2014-2016, several large auctions were held for the sale of BTC confiscated from Silk Road employees and dealers. In total, more than 100,000 BTC were sold. However, the implications of the closure of this gigantic darknet marketplace have been resurfacing.
and in 2020. The last state auction of crypto-currency confiscated was Finland in July 2022, which sold
1981 BTC for 45 million euros.

Salvador

Of all the countries in the world, only El Salvador has so far bought bitcoins purposefully and at the expense of the state budget. In 2021, El Salvador, through the administration of Nayib Bukele, introduced bitcoin into circulation along with fiat currency. And the country's government continues to build up reserves, despite crises and exchange rate fluctuations. However, the reserves of El Salvador are small even in comparison with most of the above companies. On July 1, they were 2381 BTC, with an average purchase price almost twice the current one.

Non-public hodlers

Among non-listed companies, many also hold bitcoin. One can note, for example, Grayscale, the operator of the oldest trusts in the United States for bitcoin (GBTC) and other cryptocurrencies. EOS developer Block.one may still own 140,000 BTC. And in 2020, Stoneridge announced the purchase of 10,000 BTC, which are placed in private investment funds. And this is just the tip of the iceberg.

Many businessmen buy bitcoins to personal accounts. These are, for example, the owners of the Gemini exchange, the Winklevoss brothers, who were the first to publicly declare themselves crypto billionaires. This honorary list includes Mike Novogratz, Tim Draper, Roger Ver and other famous people. But none of them have made any recent statements about the state of their finances and the specific amounts of BTC in their possession.

Do not forget about the most important hodler - Satoshi Nakamoto. He is the only one in the world who owns more than 1 million BTC. However, no one knows his intentions.

Results

The cut by public companies suggests that corporate holders are not going to run away from bitcoin. Tesla was the only major public company to sell most of its bitcoins at a loss. There are also difficulties for some investment funds (primarily those who invested in Terra) and industrial miners.

The ruin or serious financial problems of a number of companies in the industry are quite predictable - every crisis collects its victims among those who were not ready for it. On the other hand, Microstrategy, the largest corporate holder of BTC, on the contrary, continues to build up reserves, despite the fall in its shares.