Summary

• Nexon purchased Bitcoin worth US$100 million, representing nearly 2% cash and cash equivalents reserves of the company.
• The Japanese online gaming firm purchased 1,717 bitcoins at an average price of approximately $58,226.
• The big companies like Tesla, BNY Mellon, Mastercard and PayPal are adding Bitcoin on their balance sheet to maximise returns on cash.

Japanese online gaming giant Nexon has purchased Bitcoin worth US$100 million, joining the league of big companies such as Tesla, BNY Mellon, Mastercard and PayPal that used their cash reserves to add cryptocurrencies in balance sheet.

Representative Image. Melena-Nsk, Shutterstock

The Tokyo Stock Exchange-listed company has purchased 1,717 Bitcoins at an average price of approximately $58,226, saying that it will protect its shareholder value and maintain the purchasing power of cash assets. The purchase amounts to nearly 2% cash and cash equivalents reserves of the company, it said in a press release on April 28.

Commenting on the development, Owen Mahoney, President and CEO of Nexon, said, “Our purchase of bitcoin reflects a disciplined strategy for protecting shareholder value and for maintaining the purchasing power of our cash assets.”

“In the current economic environment, we believe bitcoin offers long-term stability and liquidity while maintaining the value of our cash for future investments,” Mahoney added.

Big companies betting on Bitcoin

In a recent time, there has been rise in acceptance of cryptocurrencies such as Bitcoin (BTC), Litecoin (LTC), Dogecoin (DOGE) and Ethereum (ETC), by companies like electric car maker Tesla, payments giants Mastercard and PayPal Holdings, and financial services firms such as Bank of NY Mellon and BlackRock Inc. The investment in cryptocurrencies by these companies indicates growing demand for digital assets that was for long ignored by traditional companies.

Elon Musk. Pixabay.com

In February this year, Elon Musk-led Tesla had bought US$1.5 billion worth of Bitcoin to maximise returns on its cash. In a filing with the Securities and Exchange Commission, the auto major had said it would start accepting payments in Bitcoin in exchange for its electric cars, subject to applicable law. However, Tesla sold US$272 million or 10% worth of its Bitcoin holdings, which was revealed in its first quarter earnings report released on Monday.

Following in the footsteps of Tesla, American payments company PayPal allowed its users in the US to pay using cryptocurrencies. The company has launched new feature Checkout with Crypto which allow users to convert crypto to a fiat currency such as the US dollar at checkout.

PayPal’s rival Mastercard has also announced to start supporting select digital currency directly on its network, which will allow merchants to accept cryptocurrencies. The company, which will start this facility later this year, did not specify name of digital currencies it will support.

US-based financial services firms Bank of NY Mellon has also joined cryptocurrencies party by forming a new unit, called the Digital Assets unit, to help clients hold, transfer and issue digital assets. This new offering will start later this year, as per the bank.

Is Bitcoin the New Gold?

Given the recent fall in Bitcoin value and outstanding performance by other cryptocurrencies, such as Ethereum and Dogecoin, market analysts are raising question over the dominance of the world’s most popular currency.

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According to Goldman Sachs, it is too early to call Bitcoin as the new digital gold as it has failed to emerge as defensive asset in a risky market environment. The agency also raised concerns about Bitcoin's long-term store of value and lack of use cases.

Last week, the value of Bitcoin plunged below the US$50,000 level amid report that US President Joe Biden administration was mulling to raise capital gains tax on wealthy Americans. The digital currency hit an all-time high of US$64,870 on 14 April 2021, on the day Coinbase Global Inc. shares were listed on the US Stock Exchange. Currently, it was hovering around US$54,000 with little change in the last few days as investors continued to explore other cryptocurrencies.