Following the meteoric rise of Bitcoin in the past one decade, many publicly traded companies have been slowly stockpiling BTCs as a key asset in their corporate treasuries. However, only a few of those are as famous as Michael Saylor’s MicroStrategy, which has achieved legendary status in the crypto world for its vast digital holdings that are now believed to represent an astonishing 1% of the overall Bitcoin supply.
According to CoinGecko, it is believed that MicroStrategy owns 226,331 BTC valued at over $13.38 billion at today’s exchange rate. However, many other companies have significant BTC holdings of their own, having witnessed the immense gains made by Saylor’s organization and the net positive impact it has had on its market capitalization.
Bitcoin has become an important part of the treasuries of Nasdaq-listed cryptocurrency exchanges like Coinbase Global, as well as large-scale mining firms like CleanSpark and Riot Platforms. It is not only the crypto-native companies that see the value of holding BTC, though. Famously, Elon Musk’s Tesla began accepting cryptocurrency payments in Dogecoin from those who want to buy its electric vehicles. Musk also unveiled his crypto portfolio, saying he holds several assets including BTC, ETH and even Dogecoin, the meme coin that has taken on a life of its own.
All told, publicly traded companies collectively own at least 324,411 BTC worth $18.9 billion, and they’re not done yet. It’s a pile that’s likely going to get a whole lot bigger in the years to come.
Bitcoin as an Attractive Treasury Asset
The corporate Bitcoin treasury trend has given birth to a new kind of Bitcoin “hodler”, and it has accelerated with the recent launch of the first Bitcoin spot exchange-traded funds or ETFs earlier this year. Through these BTC ETFs, it has become much easier for organizations to gain exposure to the world’s most valuable crypto asset.
The organizations are keen to get exposed to BTC because they believe its long-term potential is vastly superior to that of the U.S. dollar, which endures a slow but steady decline with no end in sight, by design.
There are good reasons to think that holding Bitcoin and other digital assets will eventually become standard practice for corporations around the world. At the time Saylor first revealed his investment in Bitcoin, he pointed out that the asset was one of the best stores of value and inflationary hedges it’s possible to invest in. As he explained, “cash is trash”.
Advantages of holding Bitcoin
One of Bitcoin’s biggest advantages is that it is truly a global store of value. It is not restricted to the U.S. or Asia, but in fact is bought, sold and held by individuals and organizations all over the world through a myriad network of cryptocurrency exchanges, meaning it has a global pool of liquidity.
Bitcoin has many technical advantages over traditional financial assets. Famously anti-inflationary, it has a capped supply with a finite amount of coins in circulation. There will only ever be 21 million Bitcoins, and more than a few of those have been mined already.
The supply of newly minted BTC is on the decline – as evidenced by the recent Bitcoin halving – and it will continue to dwindle until it stops altogether in around 100 hundred years’ time.
Add to that the long-term culture of “hodling”, and what we have is an extremely limited supply that will surely never fulfill the anticipated demand for the asset. Bitcoin has historically risen from strength to strength, surpassing its previous all-time high with each new bull run. And all the time, the demand base grows.
In the post-COVID era, the world’s economies have stuttered, and despite the recent crypto winter, digital assets have rebounded. Perhaps, the fact that Bitcoin is ethereal, and its value is not tied to real economic cash flows measured in fiat, gives it an advantage over other investment products, such as bonds, stocks, and real estate.
For corporate treasurers, Bitcoin looks like an alternative, digital safe haven for troubled economic times, similar to how many investors have always rushed to buy up gold in earlier tumultuous times.
Bitcoin Is No Longer A Gamble
Bitcoin also has a strong ideological bent that can prove attractive to corporations. While savvy chief financial officers will always want to keep plenty of cash in their company’s coffers as an immediate fallback, holding crypto is gaining appeal because it provides them with a hedge against inflation and arbitrage. Furthermore, unlike with fiat currencies, no government can control Bitcoin or DeFi infrastructure. This creates a censorship-free financial environment for their holdings.
While Bitcoin won’t appeal to traditional banks, which are instead looking at creating their own cryptocurrencies on blockchains they can control, it will likely find favor with a good number of CFOs.
Elon Musk is one such example – a strong advocate of crypto and its independent, decentralized nature – who said in an ARK Invest podcast back in 2019 that he believes paper money is eventually going to disappear. “Crypto is a far better way to transfer value than pieces of paper, that’s for sure”. He added that he believes the technology behind Bitcoin is “quite brilliant”.
The case for Bitcoin treasuries is clear and it is equally clear that a lot of companies are buying into it, and not all of them are publicly traded, either. The amount of Bitcoin held by private companies is a lot less clear, but given that most crypto companies are not publicly traded, it’s certainly not a stretch of the imagination to assume that they might hold just as much as those that are bought and sold openly on the public markets.
Evidence of this comes from Jameson Lopp, the co-founder and Chief Security Officer at Casa, who explained on social media that his company has operated a Bitcoin treasury, under the radar, since 2018.
The crypto exchange VALR, which is one of the most prominent digital asset trading platforms in Africa, has also operated a Bitcoin treasury for a similar amount of time. According to its co-founder and CEO Farzam Ehsani, VALR’s policy since launching its platform back in 2017 has been to retain its BTC revenues, along with some other top tokens, and spend only the fiat it needs for operational expenditures, “We’re 6.5 years in now,” he said.
What’s especially eye opening is the size of some of these crypto bets, and none are bigger than Saylor’s. MicroStrategy’s $13.24 billion represents just over half of the company’s market capitalization of $26.3 billion. It has been profitable too, with the company paying $8.3 billion in real terms over the last four years to accumulate that amount of BTC. That’s a net gain of just a tad under $5 billion.
Saylor’s bet is paying off to such an extent that investing in Bitcoin no longer looks like a bet at all. What once seemed foolish and extreme is fast becoming a common strategy for corporate treasuries, and it may not be long until it evolves again to become a standard practice. Just as the number of individual Bitcoin holders has grown over time, so will the amount of corporations hodling Bitcoin.
Conclusion
If the current trends are any indication, Bitcoin has found its newest growth market and we’re still in the very early days. No one can deny that more companies will rush for Bitcoin holdings in the upcoming years. However, only time will tell when the overall adoption will initiate.
