In early 2021, when the crypto market was riding an unprecedented bull wave, Meitu — a once-iconic Chinese tech company known for its photo-editing apps — made headlines by investing heavily in Bitcoin (BTC) and Ethereum (ETH). Fast forward to mid-2022, and the story took a dramatic turn: Meitu reported massive losses totaling approximately $305 million (RMB 3.05 billion) from its cryptocurrency holdings. This case offers valuable insights into the risks of corporate crypto investments, market volatility, and the shifting fortunes of legacy tech players trying to stay relevant.
Meitu’s Bold Entry Into Crypto
On March 5, 2021, Meitu announced it had purchased 15,000 ETH and 379.1 BTC, spending around $40 million in total. The move was framed as part of a long-term blockchain strategy. CEO蔡文胜 (Cai Wensheng) declared it a pioneering step — possibly the first Hong Kong-listed company to hold Bitcoin and Ethereum as treasury reserves.
"Someone has to eat the crab first," Cai said at the time, referring to the high-risk nature of crypto. "Not participating might be the biggest risk."
The company doubled down in March and April 2021, acquiring additional ETH and BTC for about $100 million — hitting the board-approved investment cap. At that time, Bitcoin was trading near $58,000, and Ethereum hovered around $1,800.
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The Collapse: From Peak Gains to Billions in Losses
By November 2021, Bitcoin surged to nearly $69,000**, briefly pushing Meitu’s crypto portfolio into significant paper profits — reportedly over **$100 million at peak valuation. However, the euphoria didn’t last.
Starting in 2022, macroeconomic headwinds hit hard. Global central banks began tightening monetary policy, reducing liquidity and triggering a broad sell-off across speculative assets. Cryptocurrencies were among the hardest hit.
- Bitcoin: Fell from ~$69,000 (Nov 2021) to **~$19,000 by July 2022 — a drop of over 72%**
- Ethereum: Dropped from a high of $4,891** to around **$1,100 — down more than 77%
As a result, Meitu was forced to recognize substantial impairment losses:
- $18.5 million loss on Ethereum holdings
- $27.1 million loss on Bitcoin
- Total: $45.6 million, or roughly RMB 3.05 billion
These losses contributed to Meitu’s projected net loss of RMB 275–350 million for H1 2022 — nearly doubling year-on-year.
Why Did Meitu Take Such a Risk?
Meitu’s pivot to crypto wasn’t just about returns; it reflected deeper strategic challenges.
Founded in 2008, Meitu rose to fame with its flagship app MeituPic (Meitu Xiuxiu), which became a must-have tool for selfie editing across Asia. By 2016, the company went public on the Hong Kong Stock Exchange with a valuation nearing HK$100 billion.
But growth stalled. Key issues included:
- Declining user engagement: Monthly active users dropped from 456 million (2016) to 231 million (2021)
- Shrinking revenue: Revenue peaked at over RMB 4.5 billion in 2017, falling to RMB 1.67 billion in 2021
- Failed hardware ventures: After launching Meitu smartphones focused on camera quality, intense competition led to a partnership with Xiaomi in 2018 — effectively exiting the hardware game
- Shifting digital trends: Photo apps faced rising competition from video platforms like Douyin and Kuaishou
With traditional revenue streams under pressure, Meitu sought alternative paths to growth — including blockchain, NFTs, and crypto investments.
Broader Market Impact: Not Just Meitu
Meitu wasn’t alone in suffering crypto-related losses:
- Tesla: Invested $1.5 billion in Bitcoin in early 2021; later reported paper losses exceeding **$440 million**
- Block (formerly Square): CEO Jack Dorsey’s company holds over 8,000 BTC, facing similar write-downs
- Crypto Billionaires: According to Bloomberg, seven crypto-linked billionaires lost over $114 billion combined between late 2021 and mid-2022
These cases highlight a broader trend: even well-capitalized firms are vulnerable to crypto volatility.
Strategic Shifts and Future Outlook
Despite the losses, Meitu maintains a long-term view on blockchain technology. In its official statements, the company emphasized that:
- Crypto impairments did not affect cash flow or core operations
- Blockchain remains a key area of innovation
- The industry is still in its early stages with growth potential
Recent initiatives include:
- Launching “Meitu Gems,” a digital collectibles brand
- Releasing NFTs like “Pixel Memory”
- Developing “IP Star Metaverse” within MeituPic, featuring themed zones like Hello Kitty Paradise and Ultraman Light Universe
The company is also pivoting toward B2B services through image SaaS solutions for professional photographers and commercial studios — signaling a shift away from consumer app dependency.
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FAQ Section
Why did Meitu invest in cryptocurrency?
Meitu viewed crypto as part of a long-term blockchain strategy aimed at diversifying assets and exploring new tech frontiers. It framed the purchases as strategic reserves rather than short-term speculation.
Did Meitu lose all its invested capital?
No. While the company recognized significant impairment losses (around $45.6 million), it hasn’t sold all its holdings. The actual realized loss depends on future market movements and whether Meitu decides to sell.
Is investing in crypto safe for companies?
Corporate crypto investments carry high risk due to extreme price volatility and regulatory uncertainty. While some firms see it as innovative treasury management, others caution against exposure without clear hedging strategies.
How does crypto volatility affect financial reporting?
Under accounting standards like IFRS, digital assets are treated as intangible assets. If market value drops significantly below cost, companies must record impairment losses — directly impacting profitability.
What lessons can businesses learn from Meitu’s experience?
Diversification is important, but speculative bets should be limited. Companies should align investments with core competencies and maintain transparency with shareholders about risk exposure.
Is Meitu still involved in blockchain and NFTs?
Yes. Despite financial setbacks, Meitu continues developing blockchain-based products like NFTs and metaverse experiences, particularly targeting creative industries.
Final Thoughts: Innovation vs. Speculation
Meitu’s journey reflects a common dilemma for legacy tech firms: how to innovate amid declining core business performance. While its foray into crypto was bold, the outcome underscores the fine line between visionary strategy and financial recklessness.
For investors and entrepreneurs alike, Meitu’s story serves as a cautionary tale — and a reminder that even in the digital age, fundamentals matter most.
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