The Metromile company announced in its second quarter earnings report that it has purchased $1 million worth of Bitcoin.
Listed on the stock exchange, the company reported that it made a profit in the second quarter of 2021, exceeding investor expectations. However, its MILE (NASDAQ) shares tumbled in the market, with forecasts for the end of the year not encouraging.
This company’s business model is to enable vehicle owners to pay for their car insurance based on the miles driven, also called “pay-per-mile“.
With an unconventional model, the startup attracted investors and was even listed on the stock exchange. Metromile CEO Dan Preston announced the company’s results.
Metromile bought Bitcoin at a bad time for the company’s business
Indeed, the timing of Metromile’s purchase of Bitcoin was an interesting one, as the US auto insurance industry is under pressure.
Even tight with customer cancellations and unoptimistic projections, the company has not backed down from building a financial reserve in Bitcoin. In a statement with the SEC, the company disclosed its acquisition, as well as speaking to investors by the CEO.
“During the six months ended June 30, 2021, the Company acquired a total of $1.0 million in digital assets, composed exclusively of bitcoin. The Company currently accounts for these digital assets as intangible assets with an indefinite useful life in accordance with ASC 350, Intangibles – Goodwill and Others.”
Regarding the custody of acquired bitcoins, Metromile stated that it uses third-party services to protect its assets. Even so, ownership of your assets is guaranteed.
Can Bitcoin Help Business Recover Investor Confidence?
After a marked drop in the market between April and June, a period that coincided with the purchase of Metromile, the amount paid of US$ 1 million ended up becoming 900 thousand dollars.
However, the month of July was once again expressive in the rise in the price of Bitcoin, with an appreciation above all assets in the traditional market. In August, the high is still present, with a 21% appreciation against the Dollar in just the last seven days.
In other words, the next Metromile report can provide investors with positive information about the financial contribution of the company’s reserves having a good performance in the market.
It’s worth noting that MicroStrategy, the first stock exchange-listed company to buy Bitcoin, already has a big profit on its market position, and its stock has even gained supporters after its successive acquisitions.
Other big companies holding Bitcoin in reserve today are Tesla, SpaceX and Square, the company owned by Twitter’s CEO.