Who Holds the Most Bitcoin Among Corporations, and Why?
Since its inception, Bitcoin has been marked by volatile trading, with its value seeing significant fluctuations. Initially stable at less than $0.10, it saw its first substantial price increase in October 2010. Over time, Bitcoin has witnessed numerous rallies and downturns.
A pivotal moment came recently when the U.S. Securities and Exchange Commission (SEC), following court orders, evaluated and approved Bitcoin exchange-traded funds (ETFs), leading to a significant price surge. After the launch of these ETFs, Bitcoin's price exceeded $60,000 in late February and early March, peaking at $73,805 on March 14th, before settling at approximately $69,700 yesterday (April 1st).
Despite a slowdown in corporate buying following the 2022 crash, the introduction of Bitcoin ETFs has seen major holders continue to accumulate Bitcoin and has encouraged a corporate reassessment of Bitcoin and cryptocurrencies.
Corporations own Bitcoin for several reasons, aligning with their strategic objectives, risk tolerance, and outlook on cryptocurrency as an asset class. Here's a rundown of the main reasons:
Diversification: To achieve portfolio diversification, Bitcoin, with its unique market behavior and potential for high returns, offers an alternative investment avenue to stocks, bonds, and real estate.
Innovation and Technology Adoption: Companies see Bitcoin as a way to embrace digital innovation, potentially integrating it into their business.
Payment Method: There is a small and growing segment of customers who prefer to transact in cryptocurrencies. A few corporations hold Bitcoin to use it as a payment method for their products and services.
Corporate Treasury Management: Companies with a higher risk tolerance may invest in Bitcoin purely for speculative reasons, betting on its price appreciation. Given Bitcoin's volatility, this strategy can result in significant gains, although it comes with a higher risk of loss. Some companies see Bitcoin as a treasury asset, hoping to boost returns and shareholder value by holding it alongside traditional cash reserves.
Hedge Against Inflation: Bitcoin's supply is capped at 21 million coins. This scarcity is thought to help preserve its value over time, making it an attractive asset for companies looking to protect their cash reserves from inflation. As inflation slows, Bitcoin's appeal as an inflation hedge diminishes.
Brand Positioning & Marketing: Investing in Bitcoin can position a company as innovative, attracting tech-savvy customers and boosting brand image.
CoinGecko, provides a fundamental analysis of the digital currency market. Its February 20, 2024 issue reveals the technology companies who lead in corporate Bitcoin investment, showcasing varied levels of risk acceptance and an increasing belief in Bitcoin's future role across different sectors of the digital economy. CoinGecko found MicroStrategy, based in Tysons Corner, Virginia, and founded in 1989, is the largest corporate Bitcoin holder with 174,530 Bitcoins (BTC) valued at $9 billion. Following is Galaxy Digital Holdings with 17,518 Bitcoins worth around $912 million, marking a significant 900% gap in holdings. Other significant holders include Marathon Digital Holdings (13,716 BTC), Tesla (10,500 BTC), Hut 8 Mining Corp. (9,366 BTC), and Coinbase (9,181 BTC). Block (formerly Square) and Riot Blockchain hold over 7,000 Bitcoins each, with HIVE Blockchain Technologies and CleanSpark rounding out the top holders with approximately 2,600 BTC each.
The leading corporate Bitcoin holders are technology companies showing deep interest in digital and blockchain technologies. The diversity in Bitcoin investment levels reflects various risk tolerances and digital focus. Despite Bitcoin's volatility, such investments highlight confidence in its future as both a digital asset and store of value. Additionally, Bitcoin's adoption across multiple sectors—from business intelligence to electric vehicles—signals increasing but limited acceptance, possibly paving the way for wider institutional cryptocurrency adoption.