Bitcoin investment craze sweeps public companies

Recently, Bitcoin has once again become the focus of the financial market. On October 30, the price of Bitcoin briefly soared to $73,660, just 0.4% away from the historical high of $73,881.3 set on March 14. In the current political environment, the market generally predicts that the price of Bitcoin could reach $100,000 by the end of the year.

This trend has attracted the attention of publicly traded companies. Recently, a well-known tech giant stated in a filing submitted to the U.S. Securities and Exchange Commission (SEC) that it would vote on the "evaluation of investing in Bitcoin" at the shareholder meeting on December 10. Although the company's board of directors recommended opposing this proposal, shareholders hold a different view.

As one of the most influential companies in the world, the mere consideration of investing in Bitcoin by this tech giant has far-reaching implications. On the other hand, some companies that have already invested in Bitcoin, such as a certain software company, have reaped substantial returns from the rise in Bitcoin prices, setting an example for other publicly listed companies.

Tech giants consider investing in Bitcoin

Due to recent political factors, Bitcoin has once again become an investment hotspot. Although there was a slight pullback on October 30, Bitcoin has risen over 56% since the beginning of the year, outperforming major global asset classes including large-cap stocks, mid and small-cap stocks, U.S. and European equities, commodities, government bonds, gold, cash, emerging markets, and real estate investment trusts, demonstrating strong anti-inflation and counter-cyclical characteristics.

Bitcoin's status as "digital gold" has been further solidified, attracting not only retail investors but also the interest of publicly traded companies. According to SEC filings, a globally renowned technology company will include "an evaluation of investing in Bitcoin" in the agenda of the upcoming shareholders' meeting.

The proposal was initiated by a think tank from the company's advisory committee, suggesting that the company invest at least 1% of its total assets in Bitcoin, arguing that "companies should use Bitcoin as a hedging tool to protect shareholder value." However, the company's board of directors recommended that shareholders vote against it.

The board stated that the company's global finance team has conducted a comprehensive assessment of various investment assets, including those that can provide diversification and inflation protection, as well as those that can reduce interest rate risk. Previous assessments have already considered Bitcoin and other cryptocurrencies, and the company will continue to monitor relevant trends and developments.

The board emphasizes that the high volatility of Bitcoin is a key factor in assessing investments. Although crypto assets may have investment value, their extreme price fluctuations can adversely impact the balance sheets of publicly listed companies, and thus are not regarded as a sound asset choice.

The final decision-making power will rest with the majority shareholders. According to reports, the two largest institutional shareholders of the company hold different attitudes towards cryptocurrency, with one supporting Bitcoin investment while the other remains cautious.

Even if the proposal is not approved, this tech giant's consideration of investing in Bitcoin still has far-reaching implications, reflecting that Bitcoin is gradually being accepted by mainstream financial institutions.

Precedents of Public Companies Investing in Bitcoin

In fact, it is not new for publicly listed companies to invest in Bitcoin. Data shows that currently, 29 listed companies hold Bitcoin, with a total of 360,000 coins, valued at over $2.6 billion. Among them, a certain software company is the most representative example.

Since the software company first purchased Bitcoin in August 2020, it has adhered to a buy-and-hold strategy. As of the third quarter of 2024, the company has invested approximately $9.9 billion to acquire 252,220 Bitcoins, becoming the publicly traded company with the largest Bitcoin holdings in the world. The company's latest financial report indicates plans to raise $42 billion over the next three years to purchase more Bitcoins.

This strategy has brought substantial returns to the software company. The company's average purchase price for Bitcoin was around $39,266, while the current price of Bitcoin has exceeded $72,000. The company's stock price has also reached a 25-year high, with a market capitalization surpassing $50 billion. Reports indicate that the company's stock performance over the past two years has outperformed almost all large U.S. stocks, including a well-known chip company.

In addition, a certain electric vehicle manufacturer also holds a large amount of Bitcoin. The company first purchased Bitcoin worth $1.5 billion in February 2021. As of the third quarter of 2024, the company holds Bitcoin worth $763 million, ranking fourth among publicly traded companies in terms of holdings. It is noteworthy that after reducing its holdings by 75% in the second quarter of 2022, the company has not sold any Bitcoin for two consecutive years, demonstrating a long-term optimistic attitude towards Bitcoin.

Conclusion

Although the board of directors of this tech giant currently holds a cautious attitude towards investing in Bitcoin, in the long run, as the value of Bitcoin increases and the process of mainstreaming advances, it may become a norm for listed companies to include it as part of their asset allocation. Currently, the volatility and compliance of Bitcoin remain the main issues that listed companies need to consider.

However, the regulatory environment is gradually improving. For example, the Financial Accounting Standards Board (FASB) in the United States has issued new regulations allowing for the fair value accounting of Bitcoin for fiscal years beginning after December 15, 2024. This change will make it easier for public companies to reflect the actual value of Bitcoin in their financial reports.

Overall, the position of Bitcoin among publicly traded companies may be changing, and more companies may consider incorporating it into their investment portfolios in the future.