Although the purchase is not aimed at affecting the billions of dollars of Bitcoin owned by other companies, Townsquare believes it could have made $1.2 million if it had sold its Bitcoin at the end of the first quarter.
Townsquare Media, a digital marketing and radio station company based in New York, is the latest company to back the original cryptocurrency, adding $5 million in Bitcoin (BTC) to its balance sheet.
A filing with the Securities and Exchange Commission (SEC) revealing Townsquare’s Bitcoin purchase was first picked up by Macroscope, a Twitter account focusing on institutional trading, which posted the discovery on May 10.
The company “invested an aggregate of $5 million into Bitcoin” during the first quarter of 2021, according to the filing, and explained why it chose a crypto investment, stating:
“The Company believes in the long-term potential of digital assets as an investment. The Company may increase or decrease its holdings of digital assets at any time based on our view of market conditions.”
While the price of Bitcoin at the time of purchase was not disclosed, Townsquare reported a $400,000 impairment loss due to “changes in the fair value” of its digital asset holdings over the quarter.
The alleged loss appears to be the result of the unusual manner in which companies must report their crypto holdings. Townsquare also stated that it could have sold its Bitcoin for a total of $6.2 million on March 31, when the price of Bitcoin that day closed at around $45,500. The company stated that it considers its Bitcoin investment to be liquid due to the ease with which it can be converted to cash using a cryptocurrency exchange.
While the purchase pales in comparison to MicroStrategy’s nearly $3 billion Bitcoin stash, Townsquare Media ranks near the middle of the list in terms of the amount of the cryptocurrency held by publicly traded companies.
According to Bitcoin Treasures, a website that measures Bitcoin held by companies, Townsquare would be somewhere between the Bitcoin mining companies Cleanspark Inc, which holds approximately $4.3 million, and Cathedra Bitcoin Inc., which holds slightly more than $5 million.
With the price of Bitcoin falling this year and recently reaching a 10-month low, other companies with significant holdings in the world’s first cryptocurrency have reported losses as a result of having the asset on their balance sheet.
Galaxy Digital Holdings reported a $111.7 million loss in the first quarter of 2022 due to unrealized losses on its cryptocurrency portfolio earlier in May. MicroStrategy CEO and Bitcoin supporter Michael Saylor also had to reassure investors that the company could cover its debts if necessary due to a $205 million Bitcoin-backed loan it took out in March.
