Companies add BTC to treasury for long-term potential

Over the last few years, several private and publicly traded companies have started adopting Bitcoin as a treasury asset. 

One company in particular — now well-known in the space — has accumulated over 1% of the Bitcoin (BTC) supply.

That company, MicroStrategy, has become influential in the industry for its massive Bitcoin holdings — 226,331 BTC at the time of writing — and while it often takes the spotlight away from other corporate Bitcoin holders, there are now dozens of companies with much smaller amounts of the cryptocurrency in their treasuries.

These include the Nasdaq-listed cryptocurrency exchange Coinbase and Bitcoin miners such as CleanSpark, Riot Platforms and Hut 8.

Companies that aren’t directly related to the crypto space, such as electric car maker Tesla, medical manufacturer Semler Scientific, e-commerce giant Mercado Livre and Chinese tech firm Meitu, also hold Bitcoin on their balance sheets.More recently, DeFi Technologies — a publicly listed exchange-traded product (ETP) provider — adopted Bitcoin as its primary treasury reserve asset and acquired 110 BTC.

Together, private and public companies hold 812,929 BTC, equivalent to roughly 3.87% of Bitcoin’s total supply, according to data from BitcoinTreasuries.

This trend has led to the rise of a new type of Bitcoin holder, which started shortly before the launch of spot Bitcoin exchange-traded funds (ETFs) in the United States. This makes it even easier for corporations to gain exposure to the cryptocurrency. 

The impact of companies holding Bitcoin has so far been widely seen as positive, and the motivations behind it are clear: Bitcoin has long-term potential that contrasts with the slow, steady decline of the U.S. dollar.

Adopting Bitcoin as a treasury asset

The U.S. Federal Reserve aims to keep inflation at 2% per year. In theory, in an ideal scenario, the value of the U.S. dollar will drop by 2% per year, as “inflation that is too low can weaken the economy.”

That ideal scenario hasn’t always played out, with inflation hitting 9.1% in 2022 and stabilizing around 3.5% after the Fed increased interest rates. This volatility has prompted corporations to seek assets that are more resistant to inflation.

Various central banks worldwide have adopted a similar monetary policy, contrasting with Bitcoin’s 21 million supply cap and predictable monetary policy.

Bitcoin’s features and turbulent history have seen its performance have a low correlation with other asset classes while earning it a reputation as a potential inflation hedge.

Speaking to Cointelegraph, a Binance spokesperson commented on the growing corporate adoption:

“Given Bitcoin’s low correlation to the performance of traditional asset classes, such as equities and bonds, Bitcoin may look attractive to institutional investors as an addition to their investment portfolio and hedge against traditional market volatility, thereby spreading risks while potentially enhancing portfolio performance.”