Many years before Bitcoin became mainstream, the thoughts of companies investing in Bitcoin as an alternative form of storing cash were hardly given consideration. The world’s most popular cryptocurrency is considered too volatile and too fringe to be used by any profit-oriented company or purchased from any crypto trading platform.
Nevertheless, this unwritten rule has been broken in the last few months, primarily fuelled by the severe economic effects occasioned by the outbreak of the COVID-19 pandemic. Several notable institutional companies have since bought Bitcoin from their favored crypto trading platform. This unwritten rule was first broken towards the last quarter of 2020, when MicroStrategy, a cloud software company, bought $425 million worth of Bitcoin. Not long after, payments processor company Square and electric vehicle manufacturer Tesla swiftly followed the footsteps of MicroStrategy.
Since its acquisition some months ago, Microstrategy’s Bitcoin investment has grown by $100 million, prompting other companies to rush to crypto trading platforms for Bitcoin investments. These investments have, without a doubt, paid off. Since paradigms and a16z’s investments, the value of Bitcoin has more than tripled.
Key Reasons Companies Are Investing in Bitcoin
Several companies have expressed their intent in joining the trend to invest in Bitcoin as the world’s leading cryptocurrencies continue to gain wide acceptance by companies and individuals alike. Data analysis from various crypto trading platforms revealed that thirty-four public companies have more than 213,00 Bitcoin assets at the end of June 2021.
These cryptocurrencies account for 1.14% of the entire quantity of Bitcoin presently in circulation. In addition, it is reportedly worth a whopping US$7.4 based on the price of Bitcoin as of then.
It took quite some time for Bitcoin to establish a price history and a sense of its cycles as a new asset class. Most educated investors now understand crypto’s value proposition, and it’s considered a welcome asset to diversify and extend their mostly fiat-denominated balance sheets. Furthermore, given the current negative interest rate environment, storing cash has become massively expensive for businesses. Investing in Bitcoin and other cryptocurrencies from crypto trading platforms thus appears to be a more reasonable option.
Overall, the infrastructure for purchasing, storing, and accounting crypto assets from crypto trading platforms have advanced significantly in recent years. Companies like MicroStrategy, Square, and several others have demonstrated that investing in Bitcoin is profitable and feasible. We anticipate an increase in the number of businesses interested in the logistics of purchasing Bitcoin and other crypto assets.
Top Companies With Bitcoin Investments
MicroStrategy
MicroStrategy, a well-known corporate analytics tool, has decided to use Bitcoin as its primary reserve currency. The company that creates mobile applications and cloud-based services resumed its Bitcoin buying spree in 2021. It now has 105,085 BTC in reserve, worth approximately $3.3 billion in US dollars.
Telsa
Elon Musk is another corporate company in the rank of corporate Bitcoin investors. Telsa reportedly invested a massive US$1.50 billion in Bitcoin. However, it sold ten percent of its total Bitcoin asset in the first quarter of 2021. The company’s CEO revealed that the reason for doing that was to prove the liquidity of Bitcoin as a viable alternative to storing cash.
Tesla’s Bitcoin purchase forms part of a new investing strategy targeted at diversifying its capital and maximizing returns. Tesla’s 42,902 Bitcoin is presently valued at US$1.37 billion. Nevertheless, the company could face an impairment loss of between US$25 million and US$100 million in 2022 as a result of Bitcoin’s price fall at the end of 2021.
Galaxy Digital Holdings
Galaxy Digital Holdings is a crypto-focused merchant bank and regarded by many as the biggest institutional Bitcoin holding connected directly with the crypto business, with 16,400 BTC worth just over US$522 million at the current Bitcoin price.
Voyager Digital LTD
At the current Bitcoin price, cryptocurrency brokerage company Voyager Digital owns 12,260 BTC, worth about $390 million. The company planned to become a one-stop shop for trading cryptocurrencies and revealed quarterly sales of US$60.4 million in May 2021, about a 16 times increase from the previous quarter.
Square INC
Square Inc. revealed it bought about 4,709 Bitcoins in October 2020 for an aggregate price of US$50 million, and in February 2021, it bought an extra 3,318 Bitcoins for US$170 million. The average price per token for all the Bitcoin bought is $27,407. In May 2021, Square revealed that it would not be buying any more Bitcoin; instead, it will focus on developing a hardware Bitcoin wallet that would allow its customers to store their cryptos outside of Square’s custody.
