(Yicai Global) July 5 -- Chinese photo-editing app Meitu said it expected first-quarter net loss to have at least doubled from a year earlier because of the depreciation of cryptocurrencies.

Net loss likely broadened 99.6 percent to 154.1 percent to between CNY274.9 million and CNY349.9 million (USD41.1 million to USD52.3 million) in the six months ended June 30, the Xiamen-based company announced on July 3.

The expected increase in net loss is primarily due to the impairment in the acquisition of cryptocurrencies. Meitu bought USD50.5 million and USD49.5 million worth of Ether and Bitcoin, respectively, between March and April last year. Due to the recent slump in cryptocurrency prices, the company is likely to report impairment losses of about USD18.5 million in relation to the purchase of Ether and USD27.1 million in relation to the purchase of Bitcoin.

The impairment losses will not have a material impact on the cash flow, operations, and adjusted net profit of the company’s interim results, Meitu added. Cryptocurrencies are still in their nascent stage, so it is normal that prices tend to be volatile, the firm said, noting that the blockchain industry is still developing rapidly, leaving room for cryptocurrencies to grow. For instance, the board remains optimistic about the long-term prospects of the acquired cryptocurrencies.

Meitu is the world’s first listed company to use Ether as a currency reserve, Chairman Cai Wensheng said when the company purchased the cryptocurrencies last year. In 2021, Meitu earned nearly CNY400 million from investing in cryptocurrencies.

Bitcoin has been recently plunging, with the price falling to USD19,021 yesterday, down over 50 percent from when Meitu purchased it last year.

Meitu’s shares [HKG: 1357] were trading up 1.1 percent at 94 Hong Kong cents (12 US cents) as of 10.40 a.m. today.

Editor: Futura Costaglione