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London-listed companies are turning to bitcoin to boost their share prices, drawing Europe’s largest equity market into a growing global trend in which businesses are transforming themselves into proxies for the cryptocurrency.
At least nine companies, from a web design business to a gold miner, have in the past week announced that they have either bought bitcoin to add to their corporate treasuries or plan to do so.
They are following the likes of Japan’s Metaplanet and Germany’s Bitcoin Group in seeking to emulate billionaire Michael Saylor’s Strategy. The US software group’s valuation has soared almost 400 per cent to more than $100bn since August 2020 when it announced that would start raising billions of dollars to fund bitcoin purchases.
Their moves underscore a nascent shift in sentiment in London’s market, which has few digital asset-related stocks, restrictions on investors’ ability to buy US equity market funds and a regulator that has banned bonds and derivatives linked to crypto.
By contrast, US watchdogs last year permitted stock market funds that invest directly in bitcoin. Specialist funds run by asset managers BlackRock and Fidelity have already attracted almost $50bn.
“It’s a really interesting development because it’s enabling equity investors to get exposure to an asset class that for many has been seen as complex, with a lack of visibility,” said Charles Hall, head of research at City broker Peel Hunt.
Most of the UK-listed businesses are small, lossmaking companies that typically have tiny trading volumes and see bitcoin as the solution to trigger explosive share price growth. Many are listed on the microcap Aquis Exchange, although a few are on London’s main market.
AI services company Tao Alpha on Tuesday revealed plans to raise £100mn amid “unprecedented demand” from investors “for participation in the journey of the company” following the announcement last week of its bitcoin treasury strategy.
They also include Smarter Web Company, a Guildford-based website design business listed on Aquis that rocketed in value from £4mn to more than £1bn in just two months after unveiling its bitcoin buying plan in April. Its shares have since slipped but its performance has encouraged others.
Panther Metals, a natural resources business that reported a £2.2mn loss last year, revealed this week that it had bought a single bitcoin, executing on a plan announced earlier in June. Its shares are up 81 per cent this month. Bitcoin has risen more than 74 per cent in the past 12 months.
“Our strategy is to, as rapidly as we can, build up our bitcoin holdings,” said chief executive Darren Hazelwood, adding that the company had a short-term target to hold £4mn worth of the coin.
In recent months the UK government has reiterated its plans to make the country a centre for digital assets. The moves come after other jurisdictions, including the US, Hong Kong and the EU, pushed ahead with their own rules for crypto assets such as stablecoins, a cryptocurrency pegged to a fiat currency or a commodity.
The Financial Conduct Authority in May proposed to partially lift a ban on some retail investment products linked to cryptocurrencies, a move that would relax a hardline stance in place for four years.
Nikhil Rathi, chief executive of the FCA, has defended the agency’s approach. “When we treat crypto with caution, it’s not because we are technophobic,” he told a conference in London this week. “It’s because crypto remains the second-highest money-laundering threat on the UK’s national risk register. A very real — and growing — terrorist financing risk.”
Other companies that have announced purchases or plans to buy bitcoin in the past week include Bluebird Mining Ventures, whose shares have rocketed nearly 400 per cent since the company first revealed its plans in June. It has raised £2mn in debt to spend on bitcoin and plans to raise a further £10mn.
“It’s brought the shareholders to life,” said founder Aidan Bishop. “The company was on life support before this,” he added, describing a series of delays in its Asian mining projects. Bluebird made a $898,000 loss last year, and promising to buy bitcoin has “probably saved” the company, Bishop said.
Another company, Vinanz, which was initially created as a bitcoin mining operation, this week announced the latest in a series of bitcoin purchases funded by equity and debt sales. Its holdings are now worth $3.85mn.
Hewie Rattray, chief executive, said “there’s clearly investor appetite for bitcoin . . . we’re just providing that service. We provide listed, regulated access to bitcoin.”
The lossmaking company, which has a market capitalisation of £83mn, is in the process of changing its name to London BTC Company.