Stacked
Bitcoin is part of a new age corporate treasury toolkit that’s moved beyond numbers into a belief system embedded in code. But stacking sats comes with volatility – the kind you can’t always explain in quarterly reports.
Remember when corporate treasuries were built on cash, bonds, and a CFO’s dream of steady yield? Not anymore. A number of companies are swapping stable alternatives for Bitcoin. Leading the charge is Strategy ($MSTR), holding US$63.2b BTC - close to 3% of all BTC in circulation.
Strategy’s so-called Bitcoin Treasury playbook has helped offset declining revenue from its legacy software business. Today $MSTR trades like a Bitcoin ETF with its stock price rising whenever BTC rallies. But there’s a catch. Recognising non-cash impairment charges tied to the digital asset leads to a wild swing in net income – from +86.5% in 2023 to -1161% more recently.
That hasn’t deterred Japanese firm Metaplanet ($MTPLF) from replicating Strategy’s strategy. The budget hotel operator is now the ninth-largest public holder of BTC with a US$946m stash. Metaplanet timed its entry well. It posted the strongest financial results in its 20-year history in Q1. Bitcoin income accounted for 88% of its quarterly revenue.
Both Strategy and Metaplanet use BTC Yield - the growth in Bitcoin per diluted share - to measure treasury performance. Based on share price alone, it seems to be working for them, although it’s as much a last-ditch effort to turn around BAU failures.
The same can’t be said for GameStop ($GME). They raised US$4b from issuing new shares during ‘meme stock’ surges, earning roughly US$100m a year in interest income from that cash pile. But crypto may be where investors draw the line as $GME declined after announcing a US$513m BTC buy.
Strategy, Metaplanet and GameStop are more extreme examples of a Bitcoin-focused treasuries pivot. But firms with more modest allocations have also seen a payoff. Tesla ($TSLA) has around 3% of its cash reserves in Bitcoin, which boosted Q4 net income by $US600m.
There's now 130 public companies who hold more Bitcoin than ETF issuers or funds. But as Standard Chartered’s Geoffrey Kendrick points out, roughly half those firms will be underwater if Bitcoin falls below US$90,000.
Bitcoin treasuries remain a radical approach. Advocates call it diversification. Critics say Bitcoin is a high risk asset that has no place in a treasury. Shareholders at Amazon ($AMZN), Microsoft ($MSFT) and Meta ($META) seem to agree. They’ve issued hard passes on proposals to set up a Bitcoin reserve.
It may not fix broken business models, but Bitcoin is proving one thing: in today's markets, narrative is almost as valuable as net income.
This is not financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
