For many years, the idea that publicly traded corporations might buy Bitcoin for their reserves was considered laughable. The top cryptocurrency was considered too volatile, too fringe to be embraced by any serious business.
Over the past year, fueled by the economic effects of the COVID-19 pandemic, that taboo has been well and truly broken, with a number of major institutional investors buying up Bitcoin. The floodgates first opened when cloud software company MicroStrategy bought $425 million worth of Bitcoin in August and September 2020. Others followed suit, including payments processor Square and EV manufacturer Tesla.
For investors unwilling to buy Bitcoin themselves, buying shares in public companies that hold Bitcoin can be a way of gaining exposure to the asset without the hassle of arranging self-custody. Indeed, some experts think that the extent of MicroStrategy’s Bitcoin purchases have made the company a de factoBitcoin ETF.
1. MicroStrategy
MicroStrategy, a prominent business analytics platform, has adopted Bitcoin as its primary reserve asset.
Throughout 2021, the firm—which produces mobile software and cloud-based services—continued its Bitcoin buying spree. It now holds 105,085 BTC in reserve, equivalent to over $3.3 billion in BTC. At one point, MicroStrategy CEO Michael Saylor said, he was buying $1,000 in Bitcoin every second.
Unlike other CEOs who typically shy away from discussing their personal investments, Saylor has made it public that he personally holds 17,732 BTC—currently worth over $565 million.
Some have asked how much #BTC I own. I personally #hodl 17,732 BTC which I bought at $9,882 each on average. I informed MicroStrategy of these holdings before the company decided to buy #bitcoin for itself.
— Michael Saylor (@michael_saylor) October 28, 2020
As per data from BitInfoCharts, this positions Saylor among the top 100 Bitcoin owners—assuming it is all held within a single address. It’s something of an about-face for the MicroStrategy CEO, who in 2013 claimed that Bitcoin’s days were numbered.
On New Year’s Eve, 2020, Morgan Stanley revealed that it had purchased 10.9% of MicroStrategy. And MicroStrategy is looking to get other companies invested in Bitcoin; in February 2021, it hosted a Bitcoin for Corporations strand during its World.Now conference, aimed at getting companies up to speed with the crypto asset.
During the conference, Saylor stated that he anticipated an “avalanche of companies” converting their balance sheets into Bitcoin in the coming year.
Speaking at Binance Blockchain Week, Saylor explained why he’d opted for Bitcoin over gold as a reserve asset. “The returns on gold didn’t look nearly as compelling as Bitcoin,” said Saylor, adding, “if you’re looking for a non-fiat derivatives store of value in an inflationary environment, that’s logical that you would settle upon Bitcoin as digital gold.”
2.Tesla
Electric vehicle manufacturer Tesla has joined the ranks of companies holding Bitcoin, with an SEC filing revealing that the company invested “an aggregate $1.50 billion” in the cryptocurrency. Tesla sold 10% of its Bitcoin holdings in Q1 2021; according to CEO Elon Musk, this was “to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.”
No, you do not. I have not sold any of my Bitcoin. Tesla sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.
— Elon Musk (@elonmusk) April 26, 2021
Tesla’s 42,902 BTC are currently worth $1.37 billion, with Bitcoin’s 2021 price slump meaning that the company potentially faces an impairment loss of between $25 million and $100 million in the next quarter, according to analysts.
According to its SEC filing, Tesla’s Bitcoin purchase reflects an updated investment policy aimed at diversifying its cash on hand and maximizing returns. The filing states that, “we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future.”
The company’s Bitcoin play followed months of speculation, as CEO Elon Musk took to Twitter to discuss the cryptocurrency. In late 2020, MicroStrategy’s Saylor offered to share his “playbook” for Bitcoin investing with Musk, after arguing that a move into Bitcoin would be doing Tesla shareholders a “$100 billion favor.”
Yes. I have purchased over $1.3 billion in #BTC in past months & would be happy to share my playbook with you offline – from one rocket scientist to another.
— Michael Saylor (@michael_saylor) December 20, 2020
Soon afterwards, at the end of January 2021, Musk changed his Twitter bio to the #Bitcoin hashtag; in retrospect, seemingly hinting at Tesla’s interest in the cryptocurrency.
However, Musk’s relationship with Bitcoin isn’t completely positive. After announcing that Tesla would accept payments in Bitcoin for its products and services in March 2021, just two months later the CEO abruptly announced that the company would no longer accept the cryptocurrency for payments.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
Citing the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions”, Musk revealed that the company wouldn’t be selling any of its Bitcoin holdings, and would consider using it for transactions again once mining “transitions to more sustainable energy.” He later clarified that the company would resume using Bitcoin for transactions once miners are using 50% clean energy.
3.Galaxy Digital Holdings
The largest institutional holder of Bitcoin to be directly involved with the crypto industry, crypto-focused merchant bank Galaxy Digital Holdings holds 16,400 BTC, according to bitcointreasuries.org—worth just over $522 million at current prices.
Founded by Michael Novogratz in January 2018, the company has partnered with crypto firms including Block.one and BlockFi. Novogratz is, unsurprisingly, a keen advocate for Bitcoin. In April 2020, he noted that stimulus measures announced in response to the coronavirus pandemic were driving interest in cryptocurrencies, calling it Bitcoin’s “moment” and arguing that “money doesn’t grow on trees.”
However, later in the year, Novogratz argued that the cryptocurrency’s volatility meant that gold was a safer bet, stating that, “My sense is that Bitcoin way outperforms gold, but I would tell people to hold a lot less than they do gold. Just because of the volatility.”
4.Voyager Digital LTD
Crypto brokerage Voyager Digital holds 12,260 BTC according to bitcointreasuries.org, worth around $390 million at current prices. The firm aims to provide a one-stop shop for trading digital assets, and in May 2021 reported quarterly revenue of $60.4 million, up 16x from the previous quarter. “We saw exponential adoption of cryptocurrencies as a recognized and investable asset class,” said CEO Steven Ehrlich at the time.
In its June 2021 filing with Canadian regulators, the company strikes a more measured tone, noting that, “a significant drop in bitcoin price may have a material adverse effect on the Company’s results of operations,” and pointing to the “drastic drop” in the price of Bitcoin in March 2020 as a result of market uncertainty around the coronavirus pandemic.
5.Square Inc.
Along with Tesla’s Bitcoin buy, Square’s October 2020 investment of $50 million in Bitcoin lit the fuse for institutional investment in the cryptocurrency.
Since then, the payments company has continued to invest in Bitcoin, revealing that it had scooped up another $170 million worth in its Q4 2020 earnings statement. It was, perhaps, unsurprising, considering that CEO Jack Dorsey is an enthusiastic advocate for Bitcoin (even running his own Bitcoin node).
More important than Square investing $50mm in #Bitcoin is sharing how we did it (so others can do the same): https://t.co/35ABYHuz4f
— jack (@jack) October 8, 2020
At the time, the company described the investment as “part of Square’s ongoing commitment to bitcoin,” noting that “the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis.”
With its holdings now amounting to 8,207 BTC, worth $255 million at current prices, Square hasn’t changed its tune on Bitcoin. In March 2021, Square CFO Amrita Ahuja argued that, “There’s absolutely a case for every balance sheet to have Bitcoin on it,” in an interview with Fortune, while reaffirming the company’s commitment to holding the cryptoasset “for the long term.”
In May 2021, the company reaffirmed its commitment to its Bitcoin buying strategy, following an interview in which Ahuja had said the company had no plans to make further Bitcoin purchases. Square has also made further efforts to build out the Bitcoin ecosystem, launching a $5 million fund to further crypto education and leaping to Bitcoin’s defense with a white paper defending the cryptocurrency’s environmental impact.
In July 2021, the company announced plans to develop a Bitcoin hardware wallet; perhaps it’ll transfer its holdings over to its own product.
6.Marathon Digital Holdings Inc.
Bitcoin mining company Marathon Digital, unsurprisingly, is also a large holder of Bitcoin, with 5,784 BTC in its corporate treasury (worth around $184 million at current prices). The company, which aims to build “the largest Bitcoin mining operation in North America at one of the lowest energy costs,” originated as a patent holding firm (and was often referred to as a patent troll) before its pivot into crypto mining.
The company’s had a good year, kicking off 2021 with a $200 million capital raise before rounding out January with a $150 million Bitcoin purchase. Over the last year, its stock price has surged by over 3,000%, boosted by the exodus of crypto miners from China (indeed, it’s outperformed Bitcoin over the year to date).
Marathon Digital eventually aims to have over 103,000 Bitcoin miners churning out 50-60 BTC a day; as of June 2021 it was producing 265.6 BTC a month, so it still has a ways to go. But with the firm taking delivery of another 18,000 ASIC mining rigs in June, and another 1,000 on the way, it’s well on track.
7.Coinbase Global, Inc.
Arguably the best-known crypto firm in this list, crypto exchange Coinbase went public in a direct listing on the Nasdaq in April 2021.
The move was hailed as a landmark for the crypto industry, though that hasn’t been borne out by Coinbase’s declining stock price; by July 2021, COIN was a full third lower than its price on its listing.
Ahead of its listing, in February 2021, Coinbase revealed that it held $230 million in Bitcoin on its balance sheet; by July 2021, its Bitcoin holdings had slipped to $143 million (4,482 BTC).
8.Bitcoin Group SE
Germany-based venture capital firm Bitcoin Group SE holds 3,947 BTC, worth $126 million at today’s prices. Its investments include crypto exchange Bitcoin.de and Futurum bank, which merged in October 2020 to form “Germany’s first crypto bank”.
The move followed the German parliament’s decision to enable banks to sell and store cryptocurrencies, with Bitcoin Group SE managing director Marco Bodewein highlighting the opportunity to introduce the bank’s institutional investors to crypto’s “high returns and safety features.”
9.Hut 8 Mining Corp
Canadian crypto mining firm Hut 8 holds 3,522 BTC, worth $112 million, according to bitcointreasuries.org. In June 2021, the company listed on the Nasdaq Global Select Market under the HUT ticker, with the company’s SEC filing noting that it’s “committed to growing shareholder value by increasing the number and value of our bitcoin holdings”.
UPDATE
: HUT 8 GOALS
5,000 Self Mined #BTC by end of Q4 2021
— Hut 8 Mining (@Hut8Mining) June 28, 2021
The company also explained that it generates fiat income by leveraging its reserve of self-mined and held Bitcoin, “via yield account arrangements with leading digital asset prime brokerages”.
In June 2021, Hut 8 shared its ambitious goal of mining 5,000 BTC by the end of the year; with the company snapping up new mining machines and China’s crackdown reducing Bitcoin’s mining difficulty, unsurprisingly the company’s optimistic that the “favorable geopolitical environment” will benefit its mining operations in 2021.
10.Riot Blockchain, Inc.
Another crypto mining outfit, US-based Riot Blockchain brings up the rear of the top 10, with relatively modest holdings of 2,243 BTC, worth $71 million at today’s prices.
With its valuation surging from below $200 million in 2020 to highs of over $6 billion in 2021, the Nasdaq-listed company has been on an aggressive expansion drive of late. In April 2021, it spent $650 million on a one-gigawatt Bitcoin mining facility in Rockdale, Texas; describing the purchase as a “transformative event” that would make the company the “largest publicly-traded Bitcoin mining and hosting company in North America, as measured by total developed capacity.”
Nevertheless, the ongoing Bitcoin slump has eaten into Riot’s share price. At the time of the Rockdale purchase, it was trading at $48 a share; by July 2021 it had slipped to around $28 a share, a drop of 41%.
