Bitcoin fever is rising among listed companies.
Recently, Bitcoin has undoubtedly become the hottest thing in the financial market again. Just yesterday, Bitcoin soared to $73,660, only 0.4% away from the historical high of $73,881.3 set on March 14 this year. Against the backdrop of Trump's soaring chances of winning, the market generally predicts that BTC will reach $100,000 by the end of the year.
Listed companies also seem to have their eyes on this piece of fat meat. Just recently, Microsoft stated in a document submitted to the U.S. Securities and Exchange Commission (SEC) that it will vote on the issue of "Evaluation of Bitcoin Investment" at the shareholders' meeting on December 10. Although the board of directors has proposed to oppose this proposal, shareholders have different thoughts.
As one of the world’s most well-known companies, it cannot be denied that Microsoft’s mere consideration of BTC investment has far-reaching significance. On the other hand, MicroStrategy, which has already taken action, has made a lot of money from the dividends, and has also taught listed companies an important lesson.
01. Microsoft proposes to invest in BTC? The board of directors opposes
Affected by Trump's deal, Bitcoin has once again attracted envious attention in recent times. Although it fell slightly after being just one step away from its historical high on October 30, from the perspective of asset performance, Bitcoin, which has risen by more than 56% this year, has outperformed major global assets including large-cap growth, small-cap growth, US and European stocks, commodities, government bonds, gold, cash, emerging markets, and real estate investment trusts, showing extremely high anti-inflation and anti-cyclical characteristics.
"Digital gold" has become a reality, and not only retail investors are FOMO, but also listed companies with more capital have naturally become interested in it again. According to the documents submitted by the US Securities and Exchange Commission on October 24, Microsoft also seems to have investment intentions in Bitcoin. The company has included the topic of "evaluation of investment in Bitcoin" in the "voting agenda" of the next shareholders' meeting to be held on December 10.
The proposal was initiated by the conservative think tank National Center for Public Policy Research, which is on the advisory board of Microsoft's 'Project 2025'. It recommends that Microsoft invest at least 1% of its total assets in Bitcoin, arguing that "companies should consider Bitcoin as a hedging tool to protect shareholder value." Judging from the price performance, this statement is true, and there is nothing wrong with asset diversification. However, under this proposal, it has been marked by the Microsoft board of directors, "It is recommended to vote against this proposal."
Microsoft pointed out that the board of directors was opposed to the proposal, believing that voting was unnecessary, and said that the proposal had been fully considered. The document described, "Microsoft's global financial and investment services team conducted a comprehensive assessment of various investable assets to provide funds for Microsoft's continued operations, including assets that are expected to provide diversification and inflation protection, as well as assets that can reduce the risk of significant economic losses caused by rising interest rates. In previous assessments, Bitcoin and other cryptocurrencies were considered, and Microsoft will continue to pay attention to trends and developments related to cryptocurrencies to provide reference for future decisions."
As for the basis for consideration, Microsoft also explained that volatility is a key factor that must be taken into account when evaluating cryptocurrency investments. In other words, Microsoft believes that although crypto assets may be a good asset and Microsoft does not completely exclude it, the obvious and drastic price fluctuations of Bitcoin will have an impact on the balance sheet of listed companies and is not a stable asset choice.
Of course, although the board of directors has sentenced Bitcoin to death, the final decision on the proposal obviously does not lie with the board of directors, but with the attitude of the majority of shareholders. According to data disclosed by Tonghuashun, Vanguard and BlackRock are currently the largest institutional shareholders of Microsoft, holding 8.95% and 7.30% of the shares respectively.
BlackRock is no stranger to the crypto space. This year, it launched spot ETFs for Bitcoin and Ethereum. As of October 30, the market value of BlackRock's Bitcoin exchange-traded fund IBIT has exceeded $30 billion, making it the best performer among the first batch of Bitcoin ETFs. In an interview on October 15, Larry Fink, chairman and CEO of BlackRock, also emphasized that "Bitcoin is an asset class in itself, and it is an alternative to other commodities such as gold."
Although BlackRock supports Bitcoin, the attitude of another shareholder, Vanguard Group, is not so friendly. As early as the beginning of this year, Vanguard Group made it clear that it would not allow its customers to buy any of the 11 spot Bitcoin ETFs launched, and mentioned that Vanguard also has no plans to offer Vanguard Bitcoin ETFs or other encryption-related products. "Our view is that these products are inconsistent with our focus on asset classes such as stocks, bonds and cash. Vanguard Group regards these asset classes as the cornerstone of a balanced long-term investment portfolio."
With two major shareholders competing against each other, the minority shareholders must have their own calculations, and the final voting result is difficult to predict. But from the current point of view, Microsoft shareholders have begun to vote on this proposal. If the vote is successful, Microsoft, as a benchmark representative in the industry, will further strengthen the public market awareness of Bitcoin and trigger a chain reaction, promoting Bitcoin to be included in the financial strategies of more listed companies, thereby strengthening the digital gold positioning and significantly advancing the mainstreaming of Bitcoin. But on the other hand, even if the vote fails, Microsoft's consideration will still have a far-reaching impact on the industry. One of the world's largest listed companies has become interested in Bitcoin, which is a strong example of Bitcoin's entry into the mainstream.
02. It is not new for listed companies to invest in Bitcoin
In fact, from the perspective of listed companies alone, investing in Bitcoin is not new. According to Coingecko data, there are currently 29 listed companies holding Bitcoin, with a total of 360,000 Bitcoins and a total value of more than US$2.6 billion. The most representative one among them is MicroStrategy.
Back on August 11, 2020, MicroStrategy announced for the first time that it would enter the Bitcoin field, purchasing 21,454 Bitcoins at a price of US$250 million, officially incorporating Bitcoin into the diversified asset portfolio of listed companies. This move caused an uproar in the market at the time, and also marked the mainstream "1995 moment" that was extremely critical for Bitcoin.
Every year since then, whether it is rising or falling, MicroStrategy has always adhered to one concept - buying and hoarding coins. Since 2020, MicroStrategy has firmly implemented this strategy. As of the third quarter of 2024, MicroStrategy has acquired 252,220 bitcoins at a price of approximately US$9.9 billion, becoming the listed company with the most bitcoins in the world. In the financial report released recently, MicroStrategy stated that it will continue to implement the strategy, raising US$21 billion in equity and issuing US$21 billion in bonds in the next three years, and using additional capital to purchase more bitcoins as financial reserve assets to achieve higher returns.
It turns out that MicroStrategy has become the biggest winner in this gamble on Bitcoin. The average price of each Bitcoin purchased by MicroStrategy is about $39,266, and the current Bitcoin has soared to $72,000. From the perspective of stock price performance, MicroStrategy has soared all the way, now reaching $247.31, a 25-year high, and successfully joining the $50 billion market value club. According to Bloomberg, MicroStrategy's stock performance in the past two years has outperformed almost all large U.S. stocks, including Nvidia. The report emphasized that the company's "unconventional" decision to buy Bitcoin four years ago to offset inflation drove a gain of more than 1,700%.
MicroStrategy's strategy is therefore highly sought after. Overseas KOL Glenn Hodl pointed out that under the current valuation model, MicroStrategy is highly dependent on BTC, which makes it have two valuation models at the same time. One is the discounted value brought by the growth of its own business system; the other is the current value of the BTC commodity itself. As long as there is an expectation of future premium for Bitcoin, MicroStrategy can continue to push up its market value by adjusting the proportion of Bitcoin holdings and stock issuance. With such a good example, other companies are also eager to move, and imitators are emerging one after another. For example, Luxembourg Digital Securities Market STOKR has stated that it will follow MicroStrategy and actively expand its Bitcoin reserve in the next few years.
In addition to MicroStrategy, another well-known company, Tesla, also holds valuable Bitcoin. Tesla first bought Bitcoin in February 2021, when it bought $1.5 billion worth of Bitcoin. In the same year, Musk also said that Tesla could be purchased with Bitcoin, but the subsequent purchase may be abandoned due to drastic price fluctuations. As of the third quarter of 2024, the financial report disclosed that Tesla had a Bitcoin holding worth $763 million, ranking fourth among listed companies, second only to MicroStrategy, Marathon and Galaxy Digital.
It is worth noting that although Tesla made large transfers in the third quarter, transferring 75.18 million, 76.08 million and 77.16 million US dollars of Bitcoin to anonymous wallets, there has been no sales so far. This also means that after reducing its holdings by 75% in the second quarter of 2022, Tesla has not sold Bitcoin for two consecutive years, showing Musk's long-term bullish sentiment on Bitcoin. Coincidentally, SpaceX also holds about $560 million in Bitcoin. The two companies now own a total of about 19,788 Bitcoins, with a total market value of about $1.3 billion.
03. Conclusion
Back to the topic of this article, Microsoft, in general, given the current attitude of the board of directors, Microsoft's vote on Bitcoin is more symbolic than practical, but from a long-term perspective, as Bitcoin's value grows and its mainstreaming progress is promoted, Bitcoin, as one of the targets of diversified asset allocation, will also tend to be held by listed companies. However, from the current perspective, Bitcoin's volatility and compliance issues are still a huge obstacle for listed companies.
On the positive side, the United States has also loosened up in terms of compliance, with changes in accounting standards being a typical example. At the end of last year, the Financial Accounting Standards Board (FASB) of the United States issued new regulations to officially adopt the fair value accounting of Bitcoin in fiscal years beginning after December 15, 2024. Before the change in this accounting method, listed company holders had to make impairment losses on Bitcoin, but their appreciation could only be recorded at cost price. This was undoubtedly a major obstacle for listed companies eager to have impressive financial reports. After the change, Bitcoin can be recorded at market fair value, and this problem will be solved.
From this we can see that the ship of Bitcoin listed companies may be about to set sail.
