Block.one has 140,000 BTC on its balance sheet, which is twice the value of the entire EOS market cap: should we buy the asset?
EOS’s performance has been quite disappointing during the last few weeks‘ rally, so much so that the cryptocurrency has dropped out of the Top 10 by market cap: nevertheless, one industry executive believes that EOS is one of the best digital assets to invest in right now.
Jeff Dorman, Chartered Financial Analyst and CIO of Arca, made these Bitcoin Champion statements based on Block.one’s extensive Bitcoin holdings.
Before delving into the matter, Dorman noted that EOS is the only major crypto asset, aside from XRP, that has not made significant gains during this rally. Over the past twelve months, the price of EOS has fallen by 26%, and losses have even increased recently, following the resignation of CTO Dan Larimer.
Given that many ‚zombie projects‘ are up 300% to 1,000%, Dorman believes EOS provides a good opportunity from a risk/reward perspective.
According to data compiled by financial comparison platform Bankr.nl, Block.one owns 140,000 BTC, worth an estimated $5.25 billion at the current price level. Dorman compared the market cap of EOS with that of Bitcoins held by Block.one:
„At a current value of $2.77, EOS’s market capitalisation is $2.6 billion, which represents only 47% of the value of their BTC holdings. This means that by buying $EOS, you are effectively buying $BTC at $18,771. This is a significant discount.“
Dorman said that generating a return on investment (ROI) from Book Value is essentially like making a bet on what the company’s management will do with that capital. He added that Block.one and the EOS team has done little to instil confidence in the market.
At this point, EOS and Block.one CEO Brendan Blumer need to either create value for token holders as soon as possible, or return the capital. If not, they risk significant legal problems.
Not everyone agreed with Dorman, however. Some pointed out that investing in EOS is not the same as buying BTC:
„To be clear, buying Bitcoin is NOT the same as buying EOS. Block One owns 10% of the supply of EOS tokens, they update the EOSIO code. But EOS is a public blockchain. And B1 does not reward EOS token holders with their Bitcoin holdings.“
The huge amount of Bitcoin on Block.one’s balance sheets may explain what well-known crypto podcaster Peter McCormack said:
„EOS was nothing more than a scam to the detriment of Bitcoin.“
At the time of writing this article, EOS is trading at $2.80, down almost 10% from last week.