Canadian bitcoin miner Bitfarms announced Monday that it has invested $43.2 million in bitcoin as the cryptocurrency plunged nearly 12% during the first week of the year, becoming the latest publicly traded company to double in the emerging crypto market despite some experts warning that its volatility makes it one Unreliable investment.
In a statement on Monday, Toronto-based Bitfarms said it bought 1,000 bitcoins during the first week of January, increasing its holdings to more than 4,300 coins worth about $175 million; For comparison, Bitfarms reported revenue of about $121 million for the 12 months ending in September.
“With the decline in bitcoin, we seized the opportunity to transfer funds to BTC,” Bitfarms founder and CEO Emiliano Grodzki said in the statement, while adding the company’s “guiding strategy” is to accumulate the largest number of bitcoins at the lowest cost and in the fastest amount of time.
Nasdaq-listed Bitfarms shares fell about 4% in pre-market trading after the announcement, roughly tracking the broader cryptocurrency market’s losses of about 3% over the past 24 hours.
The Bitfarms investment comes less than a week after MicroStrategy, the data analytics firm run by billionaire Michael Saylor, revealed the purchase of nearly 2,000 bitcoins for $94 million at the beginning of December, as prices similarly struggled to recoup losses after an astonishing record. 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 helped stocks surge by as much as 125% — before bitcoin’s plunge in November helped push the stock down more than 50%.
$10 billion. That’s how much about 20 public companies with a market capitalization of more than $1 trillion have 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, owns about 124,400 coins worth approximately $5.1 billion, while approximately 43,200 Tesla coins are worth about $1.8 billion.
Jerry Klein, managing partner of $9 billion Treasury Partners Advisory, wrote in an email to Forbes Last month. “Corporate investors don’t get any of the sweets, but all the indigestion by investing in bitcoin.” Accounting rules require businesses to treat bitcoin as an intangible asset, Klein says, which means businesses must “write the value if the price goes down, but can’t write the value if the price goes up.”
Trading at around $40,800 on Monday morning, bitcoin is down nearly 40% from a record $69,000 in November, as the broader market recedes on the possibility that central banks will withdraw economic stimulus in the pandemic era more quickly than previously expected. “The long-term outlook remains bullish for both the biggest cryptocurrencies, but the short-term looks ugly,” Ed Moya, chief market analyst at Oanda, wrote in a weekend note. Despite bouts of extreme volatility in bitcoin, Goldman Sachs analysts wrote in a note to clients last week that the cryptocurrency could exceed $100,000 in the next five years, as it increasingly competes with gold as an inflation hedge. At the moment, the latest flaw has pulled the value of the world’s cryptocurrencies, which currently stands at around $1.9 trillion, down more than $300 billion over the past week.
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