In early March 2021, Meitu Inc., the Hong Kong-listed parent company of the popular beauty app Meitu, made headlines with a significant corporate announcement. The company revealed it had purchased $40 million worth of cryptocurrencies, specifically Ethereum (ETH) and Bitcoin (BTC). This move sent ripples through both the financial and tech worlds, sparking discussions about corporate treasury strategy, blockchain adoption, and the future of digital assets.
Understanding Meitu's Cryptocurrency Acquisition
On March 5, 2021, Meitu executed its investment plan, acquiring:
- 15,000 Ether (ETH) for approximately $22.1 million
- 379 Bitcoin (BTC) for approximately $17.9 million
This investment represented a portion of a broader strategy authorized by the company's board, which allowed for the purchase of up to $100 million in cryptocurrencies. The company clarified that the funds used came from its existing cash reserves, not from its IPO proceeds.
The Official Rationale Behind the Move
In its official filing on the Hong Kong Stock Exchange, Meitu's board provided several key reasons for this unconventional decision:
- Value Appreciation Potential: The board expressed a belief that cryptocurrencies have sufficient potential for long-term capital appreciation.
- Cash Diversification: The move was framed as a treasury strategy to diversify the company's cash holdings. In an environment where global central banks were increasing money supply, cryptocurrencies were seen as a potential hedge against the depreciation of fiat currency.
- Strategic Positioning: Most importantly, the acquisition was presented as a strategic signal. It aimed to show investors and stakeholders that Meitu was serious about embracing technological innovation and preparing for a deeper foray into the blockchain industry.
Following the announcement, Chairman Cai Wensheng publicly stated on social media that this made Meitu the first Hong Kong-listed company to purchase BTC and the first publicly-traded company globally to hold ETH as a treasury reserve asset, proclaiming that "someone has to be the first to try the crab."
Market Reaction and Investor Sentiment
The market's response to the news was immediate but mixed. Meitu's stock (HKEX: 1357) experienced significant volatility:
- The share price initially surged, gapping up 14% at the market open on March 8.
- However, the gains were short-lived. The stock eventually closed the day down over 6%, with an intraday swing exceeding 22%.
This volatility mirrored the divided opinions among investors and the public. While some praised the forward-thinking approach, others were highly skeptical, viewing the move as speculative "coin flipping" rather than a genuine technological strategy. Critics pointed to the company's financial history and questioned whether buying cryptocurrencies equated to truly "entering the blockchain industry."
Meitu's Financial Background and Broader Strategy
To understand the significance of this move, it's important to consider Meitu's context. The company, known for apps like MeituPics, Meiyan Camera, and the short-video platform Meipai, went public in 2016.
Despite a large user base—nearly 300 million monthly active users at the time—the company had faced challenges in achieving consistent profitability. Its core revenue historically came from online advertising, but it had been actively diversifying into new areas like premium subscription services, cosmetic and medical beauty sectors, and testing e-commerce live streaming.
The cryptocurrency investment, therefore, can be seen as part of a larger, multi-pronged effort to pivot the business, explore new technological frontiers, and generate returns for shareholders beyond its traditional advertising model.
The Corporate Trend of Crypto Adoption
Meitu was not operating in a vacuum. Its investment came amidst a growing trend of corporations adding cryptocurrency to their balance sheets.
- Tesla: In February 2021, just weeks before Meitu's purchase, Tesla announced a massive $1.5 billion Bitcoin investment.
- MicroStrategy: The NASDAQ-listed business intelligence company has been a pioneer, aggressively converting hundreds of millions of dollars of its treasury into Bitcoin since 2020.
These moves have created a new discussion around corporate treasury management, framing Bitcoin as "digital gold"—a potential store of value and hedge against inflation. For a comprehensive look at how institutional adoption is shaping the market, explore more strategies available to understand these trends.
The Great Bitcoin Debate
Meitu's investment placed it squarely in the middle of a fierce global debate about the value and utility of cryptocurrencies.
Proponents, like Cathie Wood of ARK Invest, have argued that Bitcoin's market cap has the potential to reach trillions of dollars, becoming a fundamental asset class for institutional portfolios.
Critics, however, have been vocal. Prominent figures like Charlie Munger have dismissed Bitcoin, stating its volatility makes it a poor medium of exchange and that he would never buy it. Regulatory figures, including former U.S. Treasury Secretary Janet Yellen and ECB President Christine Lagarde, have warned about its use for illicit activities, price volatility, and environmental impact due to the energy consumption of mining.
This divide highlights the speculative and highly disruptive nature of the asset class that Meitu chose to embrace.
Frequently Asked Questions
What exactly did Meitu buy?
Meitu purchased $40 million worth of two cryptocurrencies: $22.1 million in Ethereum (ETH) and $17.9 million in Bitcoin (BTC).
Why would a company buy cryptocurrency?
Companies typically provide reasons like seeking potential capital appreciation, diversifying their cash reserves away from traditional fiat currency, and making a strategic statement about their commitment to new technology and innovation.
Was Meitu the first company to do this?
No, it was not the first. Companies like MicroStrategy and Tesla made significant Bitcoin purchases before Meitu. However, Meitu claimed to be the first public company to hold Ethereum as a treasury reserve asset.
How did the investment perform?
Based on the purchase prices disclosed, Meitu's investment was initially profitable as the prices of both BTC and ETH rose shortly after the purchase. However, cryptocurrency prices are notoriously volatile, and such valuations can change rapidly.
Does buying Bitcoin mean a company is "in blockchain"?
Not necessarily. Investing in a digital asset is different from actively developing or using blockchain technology. While it shows an interest in the ecosystem, it is often seen as a financial investment rather than an operational one.
What are the risks for a company holding cryptocurrency?
The primary risks are extreme price volatility, regulatory uncertainty, cybersecurity threats (hacking of wallets), and potential reputational damage due to the controversial nature of the asset class.