According to a recent United States SEC filing, Angel Studios have added a whopping $10.6 million worth of BTC to its balance sheet.
This is courtesy of shares the streaming platform sold on October 18, 2021.
The report has it that at an average price of $9.28 per share, Angel Studios sold 1,685,392 shares of its Class A common stock. While the Company received only $4,999,993 in cash for the stock sales, a greater percentage of the sales was received in bitcoin.
That is, the company received an equivalent value of $10,649,895 in bitcoin for the shares sold.
How Angel Studios Invested in Bitcoin
In 2021, Angel Studios made a policy to further diversify and maximize returns on cash and cash equivalents balances that are not required to maintain adequate operating liquidity.
From the foregoing, Angel Studios Inc. noted that it may invest a portion of such cash and cash equivalents in certain specified alternative reserve assets. Interestingly, the company found the number one cryptocurrency by market capitalization to be their best bet.
Consequent upon that, the Company invested an aggregate of approximately $10,600,000 in bitcoin under this policy as of December 31, 2021, according to the published U.S. SEC document.
While the streaming Company believes its bitcoin holdings are highly liquid, Angel Studios Inc. is also aware that digital assets may be subject to volatile market prices.
Of course, this volatility may be favourable or unfavourable at the time when the Company wants or needs to liquidate the digital assets.
The document further showed that as of December 31, 2021, the Company recorded a loss of $2,737,658 as the price of BTC plummeted.
Angel Studios’ Digital Assets Approach
It has been noted that the company holds bitcoin and most likely, other digital assets. Be informed that the accounts for all digital assets are held as indefinite-lived intangible assets following the company’s policy.
Also, these digital assets are initially recorded at cost. Subsequently, they are re-measured on the consolidated balance sheets at cost and net of any impairment losses incurred since acquisition.
In determining if an impairment has occurred, the Company considers the lowest market price of one unit of digital asset quoted on the active exchange since acquiring the digital asset.
If the carrying value of a digital asset exceeds the fair value so determined, the company takes it that an impairment loss has occurred with respect to those digital assets.
Furthermore, Angel Studios records gains only when realized upon the sale(s) of its digital asset holdings.
Good technology will always gain adoption. You will agree with me that in the formative years, bitcoin was regarded as a tool for criminals. Hence, many institutions and governments resisted the technology.
However, the narrative has changed. Institutional money is pouring into the crypto market and it is only going to increase.
In recent times, we have seen many institutions rise to the adoption of cryptocurrency and blockchain technology. Popular among these institutions are Microstrategy, Tesla, BlackRock, etc. It is interesting to see the Utah-based Angel Studios joining the crypto train.