Zhidu Technology, a listed company in China, has announced its plans to make an impairment provision for Bitcoin worth $16 million generated from cloud mining purchased from Bitmain. Zhidu is a shareholder of both Bitmain and BitDeer.
The 9th board of directors’ 16th meeting and the 9th supervisory board 10th meeting, held on January 30, reviewed and passed the proposal for the asset impairment provision of Zhidu Technology in 2022.
The asset impairment provision was made following the regulations of the Shenzhen Stock Exchange, Corporate Accounting Standards, and the company’s own provisions. The comprehensive review of various assets was conducted on December 31 to evaluate signs of impairment.
The scope of the asset impairment included accounts receivable, contract assets, intangible assets, goodwill, and long-term equity investments, amounting to a total of 56,259.74 million yuan. The impairment data is subject to change with the release of the annual audit report.
The impairment provision for accounts receivable and contract assets was based on the company’s assessment of expected credit risk and calculation of expected credit loss.
For intangible assets, the company’s assessment was based on the useful life and amortization method of each asset. Goodwill and intangible assets were tested for impairment annually.
The company’s digital assets, including Bitcoin, are owned by Zhidu Investment Co Ltd., a company subsidiary. The company conducted an impairment test for these assets and found that the recoverable amount was lower than its book value, leading to a write-down of the book value and a corresponding asset impairment provision.
Zhidu’s Bitcoin Provision Puts Pressure On Balance Sheet
Zhidu Technology’s $16 million impairment provision for Bitcoin has put pressure on the company’s balance sheet. The asset impairment was made in accordance with regulations set by the Shenzhen Stock Exchange and Corporate Accounting Standards.
The company’s comprehensive review of various assets as of December 31, 2022, led to the impairment provision for accounts receivable, contract assets, intangible assets, goodwill, and long-term equity investments, totaling 56,259.74 million yuan.
Zhidu’s digital assets, including Bitcoin, were tested for impairment and found to have a lower recoverable amount than their book value, leading to a write-down and a corresponding asset impairment provision.
Despite the pressure on its balance sheet, Zhidu Technology remains a listed company in China and a shareholder of Bitmain and BitDeer. The company will continue to adhere to regulations set by the Shenzhen Stock Exchange and Corporate Accounting Standards in its future asset impairment provisions.
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