Hong Kong-listed Meitu, a Chinese tech company known for photo-editing apps, warned investors of its heavy losses induced by the downturn of cryptocurrencies, in a filing with the Stock Exchange of Hong Kong on Sunday.

Meitu's losses almost doubled, increasing by 99.6 percent to 154.1 percent, compared to the same period last year, it said in the filing. "The expected increase in net loss is primarily due to the Acquired Cryptocurrencies Impairment."

The prices of cryptocurrencies meltdown is related to a sell-off triggered by concerns about interest hikes and a recession in major economies. The price of the largest cryptocurrency bitcoin peaked in November 2021 at $68,000 and has fallen to around $19,000, while Ether (Ethereum), the second-largest cryptocurrency, is down over 70 percent from its peak.

Meitu has spent about $100 million to buy 31,000 Ether and 940.89 bitcoin since March last year, of which the investment has depreciated to about $32 million and $18 million, respectively, based on their market value on June 30.

The company's shares were traded at HK$93 cents on Tuesday at the time of writing this article, declining more than 90 percent over the past year and erasing HK$3.1 billion ($395 million) of market cap.

"Prices of cryptocurrencies are prone to volatility given their adoption relative to other asset classes, such as equity, commodity and bonds, are still in their nascent stage," the company said, adding that its board views "such adoption has ample room to grow given the blockchain industry is still developing rapidly, and cryptocurrencies are an integral part of that," despite such volatility. 

Besides Meitu, the meltdown in cryptocurrencies' prices also burdens the balance sheets of Tesla, Block, and MicroStrategy with book losses of $2.16 billion to date, altogether, Blockworks, a financial media brand that reports on digital assets reported on Monday.

U.S. electric car maker Tesla has acquired 43,200 bitcoins for $1.5 billion, Bitcoin Treasuries data showed. The investment is now worth under $844 million, translating to nearly $655 million in paper losses.

Block, a payment provider owned by former Twitter CEO Jack Dorsey, bought 8,027 bitcoins for $220 million in total. These bitcoins now are worth $157 million, converting to about a 30-percent loss in the paper, or $63 million in unrealized losses.

MicroStrategy, the third largest listed stock with bitcoin in its balance sheet, is in the red about 36 percent on its 129,698 bitcoins, bought at $30,655 per bitcoin on average.

Cryptocurrencies have been in escalated regulation storms across the globe, despite El Salvador becoming the first country to adopt bitcoin as legal tender in September 2021. 

(Cover via CFP)