MercadoLibre, a “Latin American Amazon” Company, Purchases $7.8 Million in Bitcoin

Bitcoin is gradually being transformed into a “tool for global economic empowerment.”

MercadoLibre, an Argentine e-commerce platform known as the “Amazon of Latin America,” has entered the bitcoin market. The company, which has several branches in the United States, revealed that they purchased nearly $8 million worth of bitcoin.

MercadoLibre purchased the bitcoins in order to protect the company’s treasury.

According to the company’s first quarter financial statements, taking planned steps to enter the bitcoin market in 2021 is important for the company to ensure that their treasury is balanced, as other U.S. companies have done this year.

The company’s financial report states, “As part of our treasury strategy, during the quarter we purchased $7.8 million of bitcoin, a digital asset that we are disclosing in our indefinite life intangible assets.”

MercadoLibre, a "Latin American Amazon" Company, Purchases .8 Million in Bitcoin

To critics, buying so much bitcoin may seem like a huge bet on bitcoin assets, but when we track the company’s losses, we can understand why MercadoLibre is taking a risk on bitcoin. The company’s net loss jumped as its stock price fell.

Mercado Libre noted “net income before taxes of $9.5 million, up from a loss of $16.7 million in the first quarter of 2020. Net loss was $34 million, or a net loss of $0.68 per share.”

With the new U.S. policy, foreign exchange losses became significant.

Mercado Libre notes that “foreign exchange losses amounted to $15.1 million, mainly due to the increased cost of purchasing dollars in Argentina through indirect mechanisms as a result of the Argentine government’s restrictions on purchasing dollars at the official exchange rate.”

MercadoLibre believes that Bitcoin can be used as a long-term asset.

Clearly, the issue of asset valuation is not the main problem faced by cryptocurrency users. With no central authority to manage the market, institutions and investors can buy assets as they wish. This could be one of the reasons why the company is considering an underlying such as bitcoin as an alternative asset.

MercadoLibre, a "Latin American Amazon" Company, Purchases .8 Million in Bitcoin

This new development comes shortly after the e-commerce and payment platform enabled a new feature that allows users to use bitcoin to purchase real estate.

Juan Manuel Carretero, commercial director of Mercado Libre’s automotive and real estate segment, later issued a positive statement acknowledging the multiple advantages that Bitcoin brings to the real estate business, buyers and sellers.

And earlier in the day, another company, Square, reported its first quarter 2021 earnings. The company remains committed to bitcoin as a “global economic empowerment tool” and has made significant gains from its $220 million in bitcoin purchases.

According to the earnings report, Square said “in February 2021, we invested $170 million in Bitcoin because we see cryptocurrency as a means of economic empowerment that aligns with the company’s purpose.”

As of today, Square currently holds 8,027 bitcoins worth approximately $448 million, making it the third largest holder of bitcoin assets among all publicly traded companies.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-05-08 15:02
Next 2021-05-08 15:06

Related articles