(Micro)Strategy Is the Mother of All Bitcoin Treasuries
Seeing the success of Strategy, the former software company that started building a huge Bitcoin portfolio in 2020, more and more public companies have started to gobble up Bitcoin or other cryptocurrency lately. Instead of keeping excess cash in traditional safe haven assets like U.S. Treasury bills, these organizations allocate part of their treasury to Bitcoin, viewing it not only as a long-term store of value but as a potentially highly lucrative investment.
There are several reasons for adopting this strategy: to hedge against inflation and currency fluctuations by diversifying reserves beyond traditional currencies, to signal technological forward thinking to investors and customers or to profit from the seemingly unstoppable rise of Bitcoin’s valuation. Some companies, like Tesla, treat Bitcoin as just one component of a diversified treasury alongside cash and other investments. Others, like Strategy (formerly MicroStrategy), have made buying and holding Bitcoin their primary corporate mission, raising capital specifically to expand their holdings and tying their fortunes closely to Bitcoin’s price.
Several high profile public companies now hold significant Bitcoin reserves, but no company comes close to Strategy, the mother of all Bitcoin treasuries. According to BitcoinTreasuries.net, the company currently holds almost 630,000 bitcoins worth more than $70 billion, meaning it not only accounts for roughly two thirds of the total Bitcoin holdings of public companies, but also for roughly three percent of the maximum Bitcoin supply.
Other companies with large Bitcoin treasuries include mining companies MARA Holdings and Riot Platforms, Trump Media, which recently acquired $2 billion worth of Bitcoin, as well as XXI, a company that like Strategy has gone all in on Bitcoin. “The existing financial system operates on assumptions of endless expansion, debt monetization, and systemic opacity,” the company’s mission statement reads. “Bitcoin is the antithesis, it’s finite, transparent, and incorruptible. Twenty One is a corporate entity constructed on that foundation. It does not hedge against fiat collapse, it opts out. Its operations, its treasury, and its mandate are aligned with Bitcoin’s 21 million hard cap, designed for a future where economic value is measured in Bitcoin terms, not diluted fiat abstractions.”
In recent months, investors have shown great appetite for crypto treasuries, with several companies seeing massive increases in their stock prices after announcing plans to buy and hold Bitcoin or other cryptocurrencies. Things could quickly go in the other direction as well, though, as it has yet to be seen how companies that tie themselves so closely to a cryptocurrency will fare when the value of that currency falls.