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MicroStrategy’s stunning bitcoin-powered stock rally is enticing other companies looking to replicate the strategy.
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Some have already added crypto to corporate government bonds, while others are considering it.
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The currency’s reputation as a hedge against inflation or other crises is attractive as companies operate in a more volatile world.
MicroStrategy’s bet on bitcoin has sparked a wild rally in the business software company’s shares — and it’s driving more companies to copy the strategy.
MicroStrategy’s crypto playbook has sent its shares up 501% this year. Although its core business is software, accumulating a huge amount of bitcoin has become its guiding star.
Now other companies are stocking up. Following MicroStrategy’s approach, companies are issuing debt to buy bitcoin. Early adopters of the strategy include Marathon Holdings and Core Scientific – both crypto companies – and Japan’s Metaplanet.
Meanwhile, more corporate boards are agreeing to simple bitcoin purchases. While bitcoin ownership is not unique to MicroStrategy, it remains rare for companies to invest outside the crypto industry. And yet a recent $1 million purchase by biopharmaceutical company Acurx Pharmaceuticals signals a changing tide.
“Speculative transactions, previously inherent to the crypto market, are a thing of the past, and the ever-growing interest of institutions in creating reserves based on bitcoin confirms this,” Gracy Chen, CEO of cryptocurrency exchange Bitget, told Business Insider. .
In a December note, Bernstein analysts suggested that bitcoin will replace gold as the world’s main “store of value” and become a standard investment in corporate bonds.
Chen noted that bitcoin has gained a reputation as a hedge against inflation and economic crises, which could be attractive to companies as the world becomes more volatile. The argument is popping up more and more – recently a think tank pushed Microsoft to buy bitcoin for this reason, putting a similar proposal to Amazon shareholders.
Of course, bitcoin’s triple-digit rally this year also fuels dreams of big gains, as evidenced by MicroStrategy A’s wild stock rally. The company has been raking in tokens by selling interest-free convertible debt, which rewards the buyer if bitcoin continues to rise. The success of this has boosted the share price.
“At a bitcoin price of $97,400, the value of the bitcoins the company has created this year is ~$7.7 billion, and we think it’s important to note that it has created that value without the capital expenditures and operational costs that come with with bitcoin mining,” Benchmark Company director Mark Palmer wrote in November.
