“Latin American Amazon” company MercadoLibre bought $7.8 million in Bitcoin

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

MercadoLibre bought Bitcoin to protect the company’s treasury.

According to the company’s first quarter financial statements, in 2021, taking a planned step into the Bitcoin market is important for the company to ensure their treasury balance, just like other American companies have done this year.

The company’s financial report stated: “As part of the Treasury’s strategy, we purchased $7.8 million in Bitcoin this quarter. This is a digital asset that we are disclosing in intangible assets indefinitely.”

In the eyes of critics, buying so many bitcoins seems to be 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. As the company’s stock price fell, the company’s net loss soared.

Mercado Libre noted that “net income before taxes was US$9.5 million, higher than the loss of US$16.7 million in the first quarter of 2020. The net loss was US$34 million, and the net loss per share was US$0.68.”

With the introduction of new US policies, foreign exchange losses have become huge.

Mercado Libre pointed out that “foreign exchange losses amounted to 15.1 million U.S. dollars, mainly because the Argentine government restricted the purchase of U.S. dollars at the official exchange rate and increased the cost of purchasing U.S. dollars in Argentina through indirect mechanisms.”

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

Obviously, the issue of asset valuation is not the main issue faced by cryptocurrency users. Since there is no central institution to manage the market, institutions and investors can purchase assets as they wish. This may be one of the reasons why the company is considering underlying assets such as Bitcoin as an alternative asset.

This new development emerged shortly after the launch of a new feature on e-commerce and payment platforms that allowed users to purchase real estate using Bitcoin.

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

Earlier today, another company, Square, reported its earnings for the first quarter of 2021. The company remains committed to using Bitcoin as a “tool to empower the global economy,” and has reaped huge benefits from its $220 million purchase of Bitcoin.

According to the earnings report, Square stated that “in February 2021, we invested $170 million in Bitcoin because we believe that cryptocurrency is a means of economic empowerment, consistent with the company’s mission.”

As of now, Square currently holds 8,027 bitcoins, valued at approximately US$448 million, making it the third largest holder of bitcoin assets among all listed companies.