Metromile Reveals Bitcoin Purchase Worth $1 Million In Q2

Metromile digital pay-per-mile vehicle insurance company based in San Francisco revealed in its filing with the U.S. Securities and Exchange Commission (SEC) that it bought Bitcoins worth $1 million as part of its treasury reserve in June 2021.USA - Metromile sign at the Company's headquarters

Twitter handle @MacroScope17 reported the news about Metromile’s Bitcoin purchase. The tweet spurred several people to talk about the purchase, stating how significantly small the Bitcoin purchase was for the digital insurance platform and pay-per-mile auto insurer.

The report showed that Metromile has invested just 0.5% of its cash in Bitcoin, and it would have been better if the amount was at least 5-10%. The second-quarter financial results of the insurance company indicated that Metromile had $202.584 million in cash during that time of purchase.

However, such purchases mean that crypto adoption is increasing, and companies are going a step further and taking the risk to invest in Bitcoin.  

In May, Metromile stated that it would soon buy additional Bitcoins and announced that it would introduce an option in which policyholders pay for insurance and receive payment for eligible and approved insured claims in Bitcoin.

Metromile CEO Dan Preston talked about the development and said:

“We believe in the transformative potential of blockchain technology. We are still in the early days of realising how this shift to decentralised finance and cryptocurrency will create enduring advantages in insurance. Still, we believe that offering bitcoin as an option for premium and claims payments would be an important first step.”

Why Firms Are Big on Bitcoin?

Blockchain and Bitcoin technology have created unique opportunities for different individuals (traders and investors) and sectors (real estate, finance, etc.). With the rise in cryptocurrency awareness and widespread adoption, institutional investors increasingly enter the crypto landscape. Many businesses and companies have already started accepting Bitcoin and other cryptocurrencies as payment mediums for goods and services.

Metromile Nasdaq-listed insurance firm joins a rising list of firms that have bought Bitcoin for their balance sheet. A few months ago, public companies like MicroStrategy, Square, Tesla, and others purchased Bitcoins as part of their treasury reserve. MicroStrategy made headlines by putting more than 90% of its treasury assets into Bitcoin.

What appears like a smart move for them may not translate into a good one for another firm. But for these companies, are not speculating and have been quite targeted in their decision-making. Of course, these public companies have used their treasury capital to make a bet on Bitcoins to add value to their shareholders.

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Digital insurer Metromile follows through with $1M Bitcoin purchase

San Francisco-based technology firm Metromile has used 10% of the funds it previously said would be allocated towards crypto to buy Bitcoin.

According to an Aug. 10 filing from the U.S. Securities and Exchange Commission, or SEC, Metromile reported it had purchased $1 million in Bitcoin (BTC) in June. However, the firm recorded a loss of $100,000 in the original crypto buy, holding roughly $900,000 in Bitcoin as of June 30, or 25.6 BTC at the time.

Metromile’s financial report for the second quarter of 2021 says the company held $202.6 million in cash and cash equivalents as of June 30, meaning its Bitcoin investment was roughly 0.5% of funds available. Some experts advocate allocating from 1% to 3% of one’s net worth into crypto.

The SEC filing follows the company saying in May it intended to allocate $10 million towards Bitcoin in the second quarter of 2021. At the time, Metromile said it would allow its policyholders — it offers pay-per-mile car insurance — to pay for its services and receive compensation from claims in Bitcoin.

Related: MassMutual Bitcoin purchase proves crypto demand is rising, JPMorgan says

In the second quarter of 2021, Metromile announced the number of its policies in force had been “roughly flat” compared to that of Q1 due to “industry-wide unexpected regulatory delays.” However, the firm’s insurance revenue increased more than 22% over that of the same period last year.

Shares of Metromile stock trading under the Nasdaq ticker MILE dropped sharply on Monday, having stayed above $7.00 since May. The price fell roughly $25% in the last two days from $6.97 to reach $5.24 at the time of publication, making its market capitalization now $660 million.