Zhidu Co., Ltd. responds to cryptocurrency floating loss of 63 million: no disposal actions taken
Not only A-share listed companies are suffering losses from "mining," but companies in the US and Hong Kong stock markets have also reported losses from "trading cryptocurrencies."Author: Xu Cihao
Source: Metaverse NEWS
In the recently concluded year of 2022, a series of explosive events caused the sentiment in the entire cryptocurrency market to plummet, with Bitcoin's price dropping 58% over the year. Recently, several publicly listed companies holding cryptocurrencies announced their 2022 performance, all reporting losses from "speculating on coins."
Recently, Zhidu Co., Ltd. forecasted a loss of over 300 million yuan for the year, including a floating loss of 63 million yuan from holding Bitcoin, while Tesla experienced even greater impairment from its Bitcoin holdings in 2022.
Zhidu Co., Ltd. responded to Metaverse NEWS reporters, stating that the company has not taken any action regarding its Bitcoin holdings, and that its metaverse business has already generated revenue, which will be disclosed in the 2022 annual report.
1: Floating Loss of 63 Million Yuan from Speculating on Coins
On the evening of January 31, Zhidu Co., Ltd. released its 2022 performance forecast, expecting to turn from profit to loss, with a loss amounting to 305 million to 395 million yuan. In the same period last year, the company reported a profit of 133 million yuan.
In response, Zhidu Co., Ltd. explained in its 2022 performance forecast that the main reason for the company's performance loss was due to the repeated outbreaks of COVID-19, the slowdown of the macroeconomic market, and changes in the overall consumption environment. Based on cautious considerations, the company made provisions for impairment on receivables and contract assets; combined with year-end reviews and testing, it also made provisions for impairment on intangible assets, long-term equity investments, and goodwill, with a total proposed impairment provision of 560 million yuan for 2022.
Metaverse NEWS reporters noted that due to the continued downturn in the cryptocurrency market in 2022, the company's Bitcoin mining also incurred floating losses.
Zhidu Co., Ltd. stated in its 2022 performance forecast that its subsidiary, Zhidu Investment (Hong Kong) Co., Ltd., purchased cloud computing power services from BitMaintech outside of mainland China, resulting in digital assets (Bitcoin). Zhidu Co., Ltd. expects the recoverable amount to be lower than its book value based on the year-end review. Therefore, Zhidu Co., Ltd. plans to make a provision for impairment of intangible assets amounting to 63 million yuan.
A relevant person from the board secretary's office of Zhidu Co., Ltd. told Metaverse NEWS reporters that the company has invested in the cloud computing platform Bitdeer, and the purchased cloud computing power is part of a separate collaboration with Bitdeer.
Regarding the quantity of Bitcoin held and whether it will be held long-term, the aforementioned person stated that the company has not taken any action regarding its Bitcoin holdings, and the quantity of Bitcoin cannot be disclosed as it has not been announced.
It is worth mentioning that Zhidu Co., Ltd. is also a concept stock in the metaverse.
According to Zhidu Co., Ltd.'s Q3 2022 financial report, the company jointly invested with Guoguang Electric Co., Ltd. to establish a joint venture, Guangzhou Zhidu Metaverse Technology Co., Ltd., to vigorously develop metaverse business.
The company's metaverse art community project—"Meta Beyond"—was publicly tested on February 28, 2022. Currently, "Meta Beyond" has launched multiple metaverse art exhibition halls in the metaverse art community, providing users with rich metaverse scenarios and social interaction services, offering scene construction services for enterprises, conducting brand marketing for enterprises, building venues for local governments to showcase local culture while achieving government service functions, and issuing hundreds of blockchain-based digital collectibles.
A relevant person from the board secretary's office of Zhidu Co., Ltd. revealed to Metaverse NEWS reporters that the metaverse business has already generated revenue, which will be disclosed in the 2022 annual report.
2: Tesla's Floating Loss from Speculating on Coins Exceeds 204 Million USD Last Year
Not only A-share listed companies are suffering losses from "mining," but companies in the US and Hong Kong stock markets have also reported losses from "speculating on coins."
On January 31, Tesla disclosed more details about "digital asset restructuring" in its 10-K annual financial document submitted to the U.S. Securities and Exchange Commission (SEC).
Tesla wrote in the document: "In 2022 and 2021, we purchased and/or received non-substantive digital assets totaling $1.5 billion. As of December 31, 2022, we had converted approximately 75% of our digital assets into fiat currency."
"In 2022 and 2021, we recorded impairment losses of $204 million and $101 million on these digital assets, respectively, and obtained gains of $64 million and $128 million, respectively, by converting the held digital assets into fiat currency."
"As of December 31, 2022, and December 31, 2021, the book value of our held digital assets was $184 million and $1.26 billion, respectively, indicating cumulative impairment losses of $204 million and $101 million."
Additionally, according to the latest financial report of the Hong Kong-listed company Meitu, its net loss for the first half of 2022 may reach 274.9 million to 349.9 million yuan, an increase of approximately 99.6% to 154.1% compared to the net loss of about 137.7 million yuan in the same period last year.
Meitu explained the increase in net loss expectations due to impairment of purchased cryptocurrencies. According to the announcement, in the first half of 2022, the previously purchased Ethereum and Bitcoin by Meitu confirmed impairment losses of approximately $18.5 million and $27.1 million, totaling $45.6 million, equivalent to about 305 million yuan.
Pan Helin, co-director and researcher at the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, told Metaverse NEWS reporters that listed companies not focusing on their main business, chasing short-term profits, and lacking necessary awareness of price volatility risks is a significant management error.
In Pan Helin's view, the bursting of the Bitcoin price bubble can lead to corporate losses and also cause a loss of confidence in the company's management, resulting in a sharp decline in stock prices.
Tesla's stock price fell by a cumulative 65.06% throughout 2022, while Meitu's stock price fell by a cumulative 13.14% in 2022, and Zhidu Co., Ltd.'s stock price fell by a cumulative 31.92% in 2022.
