By Landon Manning
Nexon, a Korean-Japanese video game publishing company, spent nearly 2% of its entire cash reserve on bitcoin late last month, buying approximately $100 million worth.
The news came from its offices in Tokyo on April 28, 2021, describing some of the details of this titanic investment into the world of cryptocurrency. Pulling the trigger on these purchases at a time when the value of one bitcoin was roughly $58,000, Nexon has managed to accumulate 1,717 bitcoin.
CEO Owen Mahoney elaborated on this decision in a press release, claiming that “Our purchase of bitcoin reflects a disciplined strategy for protecting shareholder value and for maintaining the purchasing power of our cash assets.” He added that, “In the current economic environment, we believe bitcoin offers long-term stability and liquidity while maintaining the value of our cash for future investments.”
Best known for its subscription-based online RPG “Maple Story,” Nexon is involved not only in the development of different intellectual properties, but the long-term management of users in a number of digital worlds. In 2020, the company was added to the Nikkei 225, officially making it one of the most valuable companies in Japan. Although this sum of $100 million is somewhat paltry compared to the $1.5 billion that Elon Musk’s Tesla invested into bitcoin, Nexon’s incredibly bullish move has officially put it in the running for crypto-invested companies with the most skin in the game.
Mahoney also published a Medium post, giving more personal insight into his views on the move, outside of the official company press release.
“Only a handful of public companies worldwide own bitcoin,” he wrote, “so we thought we’d explain ourselves.”
He started by covering some basics about the nature of the relationship between investors in the company and various forms of capital, and how those can in turn lead to shareholder revenues and company growth. Although he claimed that Nexon has “few tangible assets — no factories and very little real estate,” its intangible assets such as massive intellectual property franchises are quite substantial, in addition to its liquid assets.
Writing quite candidly, Mahoney went on to state that many of the possible avenues for traditionally re-investing this liquid capital, to generate even further profits, have gone very stale with the onslaught of the COVID-19 pandemic. With the interest rates set by U.S. financial institutions at historic lows, he claimed that even junk bonds become “rewardless risk.” This can lead to a cycle of money printing and ever-increasing loans with no good end in sight.
In contrast to some of these floundering institutions, Mahoney drew attention to the many attractive opportunities provided by Bitcoin. Citing factors such as its liquidity, technological innovations and network of dedicated users, buying power and, above all, its increasing tendency to be seen as a durable store of value, Mahoney claimed that the company was willing to take a leap of faith.
“25 years ago, the idea of an entertainment world centered around online, connected, virtual worlds seemed crazy,” Mahoney concluded. “Today the idea of a non-physical store of value (like gold, but virtual) that is also un-controlled by a central authority is considered fringe… We think there’s a strong chance this too will become a mainstream idea in the not-too-distant future.”
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