Microsoft is gearing up for its annual shareholders meeting on December 9, and Bitcoin has made its way onto the agenda. In a recent filing with the U.S. Securities and Exchange Commission, the tech giant disclosed that one of the proposals up for a vote is an âAssessment of investing in Bitcoin.â Despite this, Microsoftâs board is advising shareholders to vote against it.
Source: SEC
It remains unclear whether this proposal suggests Microsoft should hold Bitcoin on its balance sheet, akin to companies like MicroStrategy.
The Relentless MicroStrategySince 2020, MicroStrategy has made waves by relentlessly accumulating Bitcoin, using both debt and equity to supercharge returns and outperform traditional investment portfolios. Today, the companyâs Bitcoin holdings are valued at over $15 billion, acquired at a cost of approximately $9.9 billion, of which $4 billion is leveraged debt. Holding 1.2% of Bitcoinâs total supply, MicroStrategy has positioned itself as the largest corporate Bitcoin holder. CEO Michael Saylor maintains that Bitcoin is the standout asset of the century, touting it as a hedge against inflation, a revolutionary digital store of value, and a prime candidate for exponential returns, despite its infamous volatility.
Source: Bitcoin Treasuries
In the past year alone, MicroStrategy has reaped huge gains, with Bitcoinâs price soaring 116%, as reflected in the Brave New Coin Bitcoin Liquid Index. Saylorâs leadership has cemented the companyâs unwavering commitment to this vision. The bigger question now looms: whatâs the next play for MicroStrategy?
MicroStrategy Aims for $150 Billion in Bitcoin HoldingsSaylorâs ultimate vision is to transform MicroStrategy into a Bitcoin powerhouse, akin to a bank that builds financial products anchored by Bitcoin. His goal? To create a suite of Bitcoin-backed financial offerings, including equities, convertible securities, fixed-income instruments, and preferred shares, all resting on an immense Bitcoin reserve.
âThis is the most valuable asset on the planet,â Saylor asserts. âThe endgame is to become the leading Bitcoin bank or finance company. If we end up holding $20 billion in convertibles, $20 billion in preferred stock, $10 billion in debt, and $50 billion in structured instruments, weâll eventually hold $100-$150 billion in Bitcoin.â
MicroStrategyâs plan relies on the firm conviction that Bitcoin is the ultimate deflationary currency. Currently, Bitcoin represents just 0.1% of global financial capital, but Saylor predicts that this share will jump to 7% by 2045. His bold estimate implies that each Bitcoin could one day be worth $13 millionâa forecast echoed by Bernstein analyst Gautam Chhugani, who projects annual growth for Bitcoin at 29%.
To fund its expansion, MicroStrategy plans to tap into U.S. capital markets, raising money through debt, equity, and innovative financial instruments. Saylor is bullish on the scalability of this debt strategy, stating confidently that it can grow without limits. He envisions easily raising $100 billion, then $200 billion, as Bitcoin evolves from a trillion-dollar asset into one worth $100 trillion.
Microsoft Wary of VolatilityMicrosoft meanwhile, is not following in Saylorâs footsteps. The filing notes that Microsoft has already given this topic consideration and closely monitors trends in cryptocurrencies to inform its investment decisions. The boardâs stance? Bitcoinâs infamous volatility makes it an unsuitable asset for corporate treasury management, which demands stability and predictability for operational liquidity.
This push for Bitcoin adoption comes from the National Center for Public Policy Research, a conservative think tank, which argues that Bitcoin, even at 1% of Microsoftâs assets, could act as a hedge against inflation and corporate bond yields. The group points to MicroStrategyâs success since its 2020 Bitcoin acquisition, where the companyâs stock skyrocketed alongside Bitcoinâs value. Despite MicroStrategyâs smaller size and scope compared to Microsoft, it has outperformed the tech behemoth by over 300% this year, thanks to its crypto holdings.
While Microsoft accepts Bitcoin in some Windows and Xbox stores, it is hesitant to take the leap into Bitcoin as a treasury asset. The board maintains that the company already evaluates a range of investment options, including cryptocurrencies. In their view, a public assessment of Bitcoin is unnecessary given their existing, thorough processes.
The upcoming vote marks a pivotal moment, as Microsoft shareholdersâmany of whom are major institutional investors like Vanguard, BlackRock, and State Streetâwill decide whether the software giant should follow the path of companies like MicroStrategy or continue to play it safe. For now, it appears that Microsoft isnât in a rush to join the ranks of corporate Bitcoin holders.
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