While the purchase won’t impact the billions of dollars worth of bitcoin held by other companies, the company said it could make $1.2 million if it sold its holdings by the end of the first quarter.
New York-based digital marketing and radio station company Townsquare Media is the latest business to embrace Bitcoin, adding $5 million worth of Bitcoin (BTC) to its balance sheet.
Townsquare’s purchase of Bitcoin was disclosed in a filing with the U.S. Securities and Exchange Commission (SEC), which was first spotted and published on May 10 by Macroscope, a Twitter account focused on institutional trading.
According to the company’s filing, the company “invested a total of $5 million in Bitcoin” in the first quarter of 2021, and explained why it chose to invest in cryptocurrencies, saying:
“The company believes in the long-term potential of digital assets as an investment. The company may increase or decrease its holdings of digital assets at any time depending on our view of market conditions.”
While the price at which the bitcoin was purchased was not disclosed, Townsquare said it incurred a $400,000 impairment loss due to “changes in fair value” of its digital assets during the quarter.
The alleged losses appear to be due to the company's need to report cryptocurrency holdings in an unusual way. Townsquare also said it could have sold bitcoin for a total of $6.2 million on March 31, when bitcoin closed at about $45,500. The company said it considers its bitcoin investment liquid because it is easy to convert it to cash using cryptocurrency exchanges.
While the acquisition is small compared to MicroStrategy's nearly $3 billion in Bitcoin reserves, Townsquare Media is in the middle of the list in terms of the amount of cryptocurrency held by public companies.
Townsquare sits between bitcoin mining company Cleanspark Inc., which holds about $4.3 million in bitcoin, and Cathedra Bitcoin Inc., which holds more than $5 million, according to Bitcoin Treasures, a website that measures corporate bitcoin holdings.
As bitcoin prices have slid this year, recently hitting a 10-month low, other companies with large bitcoin positions have also reported losses as a result of having the asset on their balance sheets.
Earlier in May, cryptocurrency investment manager Galaxy Digital Holdings reported a loss of $111.7 million in the first quarter of 2022 due to unrealized losses in its cryptocurrency portfolio. MicroStrategy CEO and Bitcoin advocate Michael Saylor also had to assure investors that the company could repay a $205 million Bitcoin-backed loan it received in March if they asked.
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