Plummeting Bitcoin... KOSDAQ DAT Stocks Deep in the Red

KOSDAQ-Listed Companies Pursuing DAT Strategies
Share Prices Fall to 1,000-Won Range Amid Delisting Fears
"More Than Just Holding Virtual Assets: A New Strategy Needed"

KOSDAQ-listed companies in South Korea that have pursued digital asset treasury (DAT) strategies have taken a direct hit as the value of virtual assets has declined. Just a few months ago, these companies engaged in aggressive operations, including buying virtual assets at their lows, but as values dropped further, their losses have deepened. In order to avoid being delisted, these companies are now mobilizing all available options, such as issuing convertible bonds (CB), capital reduction, stock split, and mergers. Market observers note that a strong core business is essential to support a DAT strategy, apart from the value of virtual assets.

According to the Korea Exchange on June 13, the average closing price on June 12 for Bitmax, Parataxis Korea, Hyper Corporation, and Bitplanet was 1,769 won. Parataxis Korea is currently suspended from trading. This figure represents a 92% drop compared to last year’s average peak price of 21,881 won. The sharp decline is believed to be driven by the falling value of virtual assets such as Bitcoin. In October last year, Bitcoin (BTC) reached an all-time high of 179,869,000 won on Upbit, but the price has been on a steady decline this year, reaching 89 million won in February. DAT companies, believing this was the bottom, purchased Bitcoin at the time. Parataxis Korea, for instance, bought 50 BTC in early March. After several fluctuations, Bitcoin was trading at 90.5 million won as of early this month.

Reviewing the first quarter reports of DAT companies, which include results from February when Bitcoin hit its first low of the year, shows a worsening financial situation and ongoing efforts to avoid delisting. Considering that Bitcoin’s lowest prices this year were recorded in February and June, the outlook for second-quarter results is also grim. Bitmax, which holds approximately 551 Bitcoins, is currently in a state of complete capital impairment (total equity at minus 4.8 billion won). Last year, their valuation loss on virtual assets had reached 10.1 billion won, and in the first quarter of this year alone, they posted a valuation loss of 14.6 billion won, resulting in a net loss of 16.5 billion won. Their main business—platform and solution services in AR, VR, and XR—generated only 27 million won in revenue in the first quarter. Sales from a subsidiary merged last year accounted for 99.6% of total revenue. As the company's situation worsened, R&D was also suspended in the first quarter (with zero R&D expenditure). With the share price plunging, the company executed a capital reduction to avoid delisting.

In the case of Parataxis Korea, it is set to be merged with Parataxis Ethereum, which shares the same parent company. The parent company is Parataxis Holdings, a U.S.-based digital asset hedge fund manager. Parataxis Korea is currently subject to substantive review for listing eligibility. The reason is that, as of the end of the most recent fiscal year, the company incurred continuous operating losses before corporate tax deductions, exceeding 50% of its equity capital. A decision on delisting is expected by July 6.

There are even companies that declared their intention to pursue a DAT strategy but have yet to begin due to worsening business conditions. As of the first quarter, 90% of Hyper Corporation’s total debt of 58.2 billion won is current liabilities, repayable in cash within a year. Of this, 28.4 billion won are liquidity CBs. Between April and May, under pressure from creditors, the company used 16.4 billion won in cash to repurchase bonds before maturity, resulting in a cash shortage. Consequently, last month, the company conducted a rights offering worth 20.4 billion won for existing shareholders. Since announcing the DAT strategy in November last year, Hyper Corporation has not been able to acquire Bitcoin or other virtual assets.

Bitplanet is holding up relatively well by continuing its main business. Bitplanet also recorded a net loss of 7.8 billion won in the first quarter. The primary cause was a revaluation loss of about 6.7 billion won on intangible assets due to the decline in the value of Bitcoin and other virtual assets. As a result, retained earnings of 4 billion won at the end of last year turned into an accumulated deficit of 3.7 billion won in the first quarter. However, the debt ratio remains low at around 15%, and the company has substantial reserves, with 52.3 billion won in capital surplus amassed from past stock issuances. The fact that it is maintaining its core business is also noteworthy. Although the profit margin for one of its main businesses, IT services, is low, it still reported 4.8 billion won in sales, and has a backlog of orders. An industry insider commented, “The value of the company is not determined by Bitcoin or other virtual assets,” and added, “It is time for companies to utilize these as strategic assets to enhance company value.”

This content was produced with the assistance of AI translation services.