Meliuz Rises as the First Company Implementing Strategy’s Bitcoin Playbook in Brazil
Companies in emerging markets are taking cues from Strategy, getting warm to bitcoin. Meliuz, a Brazilian cashback business, became the first Brazilian company to invest part of its reserves into bitcoin. Last week, Meliuz purchased over $4 million worth of BTC using part of its free cash flow.
The company committed to using 10% of its free cash flow to continue purchasing bitcoin, establishing a bitcoin treasury system a la Michael Saylor’s Strategy, but at a smaller scale.
Meliuz founder and chairman Israel Salmen commented on the reasons that led the company to take this decision. Salmen stated that bitcoin was chosen for this as the company sought to improve its cash flow, as Meliuz operates under the Brazilian real profit regime and has to pay high taxes.
He stressed:
In addition, official inflation rates do not reflect the real loss of purchasing power, so we decided to allocate 10% of our cash flow to bitcoin.
The move was received positively by the market, which registered a rise of over 15% in the price of Meliuz’s stock. Nonetheless, analysts were not so kind, stating that this investment might bring even more complications to a company already going through difficult times.
“This cash policy appears disconnected from the company’s operational objectives, generating uncertainty about its effectiveness and raising questions about the company’s ability to reinvest its cash generation in its core activities,” XP analysts assessed.
Nonetheless, Salmen states that Meliuz is aware of the potential drawbacks of this choice and that using only 10% of the company’s cash flow would not impede its operations, managing the risk of holding such an explosive asset.
Volatility is also not a concern for Meliuz, as Salmen states they are in for the long run. “We have no target or deadline to hold, we are focused on being long-term investors,” he concluded.
