British companies lose £80m after piling into Bitcoin
British companies that piled into the Bitcoin craze have lost almost £80m after a slump in the cryptocurrency’s price.
UK-listed companies have spent more than £360m on crypto purchases in an attempt to capitalise on a trend for “Bitcoin treasury” companies.
The businesses’ value mostly derives from their Bitcoin holdings rather than their operating businesses, allowing investors to gain exposure to the cryptocurrency through the stock market rather than owning the coins outright.
A string of British companies pursued Bitcoin investment strategies earlier this year amid a surge in the asset’s price and booming investor demand for US counterparts such as Strategy, which briefly became worth more than $127bn (£95bn) during a rally this summer.
However, many of the British businesses buying into the craze did so near the peak of the market, according to calculations by The Telegraph.
Thirteen UK-listed companies have spent around £364m between them buying close to 4,300 Bitcoin at an average price of $113,105 (£85,076).
The cryptocurrency’s price traded at $87,950 on Friday, a 22pc drop on that average. When combined with a £40m sale by one crypto company, Satsuma, companies have lost around £79.1m on the purchases.
Just more than half the losses have been felt by the Smarter Web Company, a Guildford-based web design business that jumped into cryptocurrency earlier this year and floated on the Aquis Stock Exchange.
The company was valued at £4m in April but its market capitalisation soared to £1.1bn in June – making the company worth more than Pets at Home, WH Smith and Wetherspoons.
Shares have now fallen by more than 90pc since their peak, although they still remain 14 times higher than when the company listed.
Andrew Webley, its chief executive, said that “a lot of people had jumped on the bandwagon” and the company was going to “keep buying Bitcoin for many years”.
“Obviously I’m disappointed with where the share price is, there will be periods when it’s overvalued and when it’s undervalued,” he said. “For people who want to invest for more than eight months, it’s still got great potential.”
Bitcoin’s price soared after Donald Trump’s election victory last year on prospects for a crypto-friendly administration and hopes that he would establish a US Bitcoin Reserve.
However, its price has fallen by 12pc this year amid wider concerns about overvalued assets. The number of Britons invested in Bitcoin has fallen from 12pc last year to 8pc, according to research by the Financial Conduct Authority.