Chinese electric vehicle company Jiuzi Holdings (US stock code: JZXN) recently announced that it will acquire 10,000 bitcoins from a digital asset investor through an equity transaction, valued at approximately $1 billion, to expand its digital asset reserves. However, against the backdrop of the recent decline in the cryptocurrency market and emerging corporate financial risks, the sustainability of the DAT model has once again been discussed.
Jiuzi New Energy swaps shares for cryptocurrencies: $1 billion equity for 10,000 Bitcoins
In an announcement , Jiuzi New Energy, a supplier of electric vehicle charging facilities, stated that it has reached a strategic agreement with a globally renowned digital asset investment institution to acquire 10,000 bitcoins from the institution in exchange for equity worth approximately US$1 billion. This transaction will be completed through an equity swap, meaning the investor will become a shareholder of the company and its bitcoin holdings will be included in the company's balance sheet.
The company's management stated that this plan is not only an asset allocation decision, but also an important step in its digital asset expansion strategy: "Large-scale holdings of Bitcoin are expected to enhance the flexibility and counter-cyclical capabilities of the company's balance sheet. By establishing a highly liquid Bitcoin reserve, we hope to strengthen our capital management capabilities and improve capital efficiency in the context of the rapid development of the global digital asset market."
Furthermore, both parties plan to collaborate across a broader range of crypto-financial areas, including digital asset management, cross-border crypto payment settlement, liquidity management, and crypto ecosystem cooperation. The company believes that establishing partnerships with digital asset institutions possessing global market resources will facilitate its participation in the rapidly evolving crypto-financial infrastructure.
Will the DAT flywheel still turn? A double-edged sword for Bitcoin Reserve Corporation.
Last year, the "Digital Asset Treasury (DAT)" strategy, which involves incorporating Bitcoin into corporate balance sheets, gained popularity globally, with some companies using it to attract market attention and boost their valuations. However, this model also carries financial risks associated with price volatility.
As the price of Bitcoin has fallen from its high of approximately $126,000 last year, it has dropped by about 20% this year. Some companies holding large amounts of Bitcoin and Ethereum are facing asset value fluctuations and fundraising pressure in the capital market. As a result, many DAT companies have recently chosen to cut their losses and sell off their cryptocurrencies to cash out .
This highlights the double-edged sword nature of DAT (Digital Assets and Assets): it can generate a premium during bull markets, but when asset prices fall, heavy reliance on a single asset can become a financial burden. It also reflects the need for companies to strike a balance between long-term asset reserves and short-term shareholder equity in the face of market uncertainty.
JZXN's stock price surged 87% in a single day, indicating both speculation and manipulation.
Upon the announcement of the news, JZXN's stock price surged by more than 87% in a single day, reminiscent of the frenzied surge in DAT last summer. However, this surge was usually accompanied by speculation and manipulation.
The author cautions that investing in DAT-related stocks is not equivalent to directly holding crypto assets. Their stock performance remains highly dependent on company fundamentals, capital operations, and market sentiment. As the crypto market enters a new cyclical phase, the success of many companies' DAT transformation strategies remains uncertain, but it is foreseeable that most will ultimately succumb to the test of time and the market.
The article, titled "Chinese electric vehicle company Jiuzi New Energy plans to exchange $1 billion worth of equity for 10,000 bitcoins," first appeared on ABMedia, a ABMedia .
