Argentine E-commerce platform MercadoLibre, which has been branded the “Amazon of Latin America” has stepped into the Bitcoin market. The company, which has several branches in the United States revealed that it had purchased almost $8 million worth of Bitcoin.
MercadoLibre buys Bitcoin to safeguard company’s Treasury
According to the company’s First quarter financial highlights of the year 2021, it was important to take calculated steps into the Bitcoin market, in order to secure their treasury balance as other U.S companies have done over this year. Excerpts of the company’s financial report read: “As part of our treasury strategy, this quarter we purchased $7.8 million in Bitcoin, a digital asset that we are disclosing within our indefinite-lived intangible assets.”
Buying that much Bitcoin may seem like a huge bet on the asset for critics, but when we go over the company’s losses, it is clear to see why MercadoLibre is taking a chance on Bitcoin. Unfortunately, net losses skyrocketed as the company’s shares dropped.
“Net income before taxes were $9.5 million, up from a loss of $16.7 million during the first quarter of 2020. Net loss was $34.0 million, resulting in net loss per share of $0.68.” – Mercado Libre.
Foreign losses were also massive, as the process of purchasing the USD became harder with the country’s new policies.
“We had foreign currency losses of $15.1 million, mainly attributable to the additional cost of assessing US dollars through an indirect mechanism in Argentina due to the restrictions imposed by the Argentine government for buying US dollars at the official exchange rate.” – MercadoLibre.
MercadoLibre remains bullish on Bitcoin as a long-term asset
Clearly, the problem of assessing an asset is not one that cryptocurrency users face. Because there is no centralized organization governing the market, institutions and investors can buy the assets instantly, at will. This could be one of the reasons why the company is considering an alternative asset like Bitcoin.
The new development comes not long after the E-commerce and payment platform enabled a new feature that allows its users to make real estate purchases using Bitcoin. Juan Manuel Carretero, Mercado Libre’s Commercial Director for Vehicles and Real Estate later made a bullish statement in which he recognized the multiple advantages that Bitcoin brought for real estate operations, buyers and sellers.
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