April 28, 2021
NEXON Co., Ltd.
http://company.nexon.co.jp/en/
(Stock Code: 3659, TSE First Section)
TOKYO – April 28, 2021– NEXON Co., Ltd. (Nexon) (3659.TO), a global leader in Virtual Worlds, today announced the purchase of 1,717 bitcoins for approximately $100 million (¥11.1 billion) at an average price of approximately $58,226 (¥6,446,183) per bitcoin, inclusive of fees and expenses. This purchase represents less than 2% of Nexon’s total cash and cash equivalents on hand[1].
“Our purchase of bitcoin reflects a disciplined strategy for protecting shareholder value and for maintaining the purchasing power of our cash assets,” said Owen Mahoney, President and CEO of Nexon. “In the current economic environment, we believe bitcoin offers long-term stability and liquidity while maintaining the value of our cash for future investments.”
About NEXON Co., Ltd. http://company.nexon.co.jp/en/
Founded in 1994, NEXON Co., Ltd. (Nexon) (3659.TO) is a company engaged in the production, development and operation of online games and Virtual Worlds. First listed on the Tokyo Stock Exchange in December 2011, Nexon was placed on JPX400 in 2015 and added to the Nikkei Stock Index 300 in 2017. In 2020, Nexon was added to the Nikkei 225. Nexon currently has more than 50 live games on multiple platforms including mobile and available in more than 190 countries. Major game franchises include MapleStory, KartRider and Dungeon&Fighter.
Contact Information
Jeff Brown
NEXON Co., Ltd. Corporate PR
CorporatePR.Team@nexon.co.jp
[1] Cash and cash equivalents as of December 2020
Nexon post from Owen Mahoney
Today we announced that Nexon has purchased $ 100 million (¥ 11.1 billion) of bitcoins, approximately 1,717 bitcoins in total at an average price of $ 58,226.
Only a handful of public companies worldwide own bitcoin so we thought we'd explain ourselves.
A company like Nexon leverages its capital to generate profits and growth on behalf of its owners. That capital can exist in a number of forms (factories, offices, know-how, patents, etc.) and sometimes in financial assets, such as shares In Nexon's case we have few tangible assets — no factories and very little real estate — but significant intangible assets, such as some of the largest IP franchises of all time, and sophisticated technologies for building and managing our Virtual Worlds. And we hold significant financial assets.
As I write this, Nexon holds more than $ 5 billion of cash and cash-equivalents, primarily in the form of JP \, US $ and KRW. These financial resources provide us enormous strategic flexibility to invest for productive uses, such as to create new Virtual Worlds, to build out our technology stack, or to buy or invest in other companies. Usually “cash in the bank” that waits for such uses can generate a few percentage points of interest at very low risk, typically by lending it to others But in the current historically-low interest rate environment, these holdings generate almost no return, especially when compared with investment. Even junk bonds — which carry higher risk and were formerly known as “high yield” — have become a source of “rewardless risk. ”
And with government spending and debt levels so high, even a small rise in interest rates would make paying down the debt even more difficult than it already is. So central banks have been increasingly “monetizing” the debt — printing money to loan to the government (in the form of buying government bonds) at low interest rates. Since January 2020, the US has printed 40% more US dollars than previously existed. We are not privy to conversations at central banks or departments of treasury, but we foresee no end to this in the near term.
We are not making a prediction on the future of interest rates. We are, however, fiduciaries of our shareholder's capital, and as such we need to think seriously about the future purchasing power of our cash in a world of potential currency debasement. So we watch our currencies very closely.
In this environment we see BTC as a form of cash likely to retain its value, even if it is not yet widely-recognized as such. While we won't go into every feature of BTC (others do that better) some attributes stand out ::
- Buying Power: . Only 21 Million BTC Will Ever Exist, And 85 Pasento Of That Is Already "Mined," Placing Significant Scarcity Value On The Current And Future Supply Of BTC To Put It More Bluntly, It Is The Hardest Money We Know Of ..
- Network Effects: .. The Value Of A Currency Rises As More People Use It We Do Not Think We Are The Only Ones Looking Closely At The Features Of Bitcoin Relative To Other Forms Of Cash As Others Do, The Value To Everyone Goes Up ..
- Liquidity And Convenience: We Can Hold It, Move It, And Trade It Easily, With Little Cost Or Overhead.
- Innovation: The Technology Underlying BTC And Other Crypto Currencies Is Beginning To Creep Into Many Areas Of Day-To-Day Use, Such As Payments, Digital Collectibles And Other Areas That Are Increasingly Relevant For Companies Like Ours.
We understand that there are risks, and we continue to study them. For now, our commitment to BTC is $ 100 million, which is less than 2% of our total cash-and-equivalents on hand. Although accounting rules call for a different treatment , we consider BTC as a form of cash along side US dollars, Japanese yen and Korean won.
25 years ago, the idea of an entertainment world centered around online, connected, Virtual Worlds seemed crazy. In those days, reasonable people asked the question: Why would anyone pay for a purely virtual in-game item? Today, the idea is mainstream and almost every major entertainment company in the world is either in the online games business or trying to be.
Today the idea of a non-physical store of value (like gold, but virtual) that is also un-controlled by a central authority is considered fringe. Reasonable people ask whether it is safe. We think there's a strong chance this too will become a mainstream idea in the not-too-distant future, and that many more people and companies will ask whether they can rely solely on legacy currency systems and instead should embrace the new.
About Nexon Bitcoin Purchase
Today, Nexon announced that it has purchased $ 100 million worth of Bitcoin. I am buying 1,717 Bitcoins for an average acquisition price of about $ 58,226 per Bitcoin.
There are not many listed companies in the world that own Bitcoin. Therefore, I would like to explain the idea that led us to the purchase of Bitcoin.
Companies, including Nexon, will make the most of their capital to generate profits and business growth on behalf of shareholders. Capital is held in a variety of forms, including factories, offices, know-how, patents, and financial assets, including stocks of other companies. Nexon owns few tangible assets such as factories and real estate, but owns a number of intangible assets such as the world's largest IP and advanced technology related to the production and operation of virtual worlds. We also have abundant financial assets.
Currently, Nexon holds more than $ 5 billion in cash and cash equivalents, primarily in Japanese Yen, US Dollars and Korean Won. With ample cash on hand, we are strategically flexible and able to create new virtual worlds, invest in technology, and make growth investments such as investments and acquisitions in companies. Until you make such an investment, you can usually get a few percent interest by depositing cash in a bank and lending to others with little risk. However, in today's historically low interest rate environment, bank deposits provide little return. Considering inflation, it's almost equal to zero. Even junk bonds, which were high-risk and once considered "high yields," are no longer returning to the point of being "meaningless risk."
In addition, government spending and debt levels are very high, and even a slight rise in interest rates can put the already difficult debt repayment into a more difficult situation. As a result, central banks continue to issue banknotes in the form of buying government bonds in order to lend money to the government at low interest rates. From January 2020 to the present, the United States has increased its supply of banknotes by more than 40%. We don't know what conversations are going on at central banks and the Treasury, but it's unlikely that this situation will end in the near future.
We are not predicting future interest rates. However, we have fiduciary duty to our shareholders and must seriously consider the purchasing power of cash in the future in today's world where the value of money may decline significantly. Therefore, we are constantly watching the money we hold.
In such an environment, we see Bitcoin as one of the cash forms that is likely to maintain its value. In general, few people think this way. I won't explain each of the features of Bitcoin (more information can be found elsewhere), but here are some of the things we pay particular attention to.
- purchasing power: issuing maximum number of bit coin is 21 million. Eighty-five percent of them are already "mined" and are of rare value now and in terms of future supply. So, as far as we know, it's the most stable currency.
- network effect: The more people to be used, the value of the currency will rise. We are not the only company that pays close attention to the characteristics of Bitcoin as one of the cash forms. As people's interest grows, its value will increase.
- liquidity and convenience: with less cost or overhead, held and moved, you can easily traded.
- Innovation: Technology to be a bit coins and other foundation of the virtual currency of payment to be used in day-to-day life, digital collections, also has begun to be incorporated into the region associated with the companies like ours.
Of course, we understand that there are risks, and we will continue to verify them in the future. Bitcoin, on the other hand, currently has a total purchase value of $ 100 million, which is less than 2% of the cash and cash equivalents it holds. Although not classified as cash or cash equivalents for accounting purposes, we consider Bitcoin to be one of the same cash forms as US dollars, Japanese yen and Korean won.
Twenty-five years ago, it was thought that there could be no virtual world, an entertainment world where many people connect and play online. At that time, the question was, "Who would buy a non-existent in-game virtual item?" Nowadays, people buy in-game items as a matter of course, and most of the major entertainment companies are in the online gaming business or are trying to enter.
Today, the idea of storing the value of non-physical assets (such as virtual gold) that are not controlled by central authorities is not yet widespread. Most people will ask if such a system is safe. But in the not too distant future, we believe that the day will come when many people and businesses will take it for granted. And you will be wondering about the security of relying solely on the traditional monetary system.