Big companies are piling into Bitcoin like never before. A recent report shows that nearly 200 organizations now hold a whopping 3 million Bitcoin, worth a staggering $315 billion! That’s more than double the holdings from the start of 2024. This isn’t just about quick profits; it’s a long-term strategy.
The Bitcoin Treasury Boom
Of those 200 companies, 147 are publicly traded or private firms holding around 1.1 million BTC ($115 billion). One company, Strategy, is leading the charge, holding a massive 580,250 BTC (around $60 billion) and boasting a $104 billion market cap.
This shows a significant shift in how large firms view Bitcoin – not just as a speculative asset, but as a core part of their long-term financial strategy.
Valuing Bitcoin-Focused Companies
For companies whose primary business is holding Bitcoin, their stock price needs to outperform Bitcoin itself. This premium is based on investor confidence in the company’s management and its strategic plan. Strategy, for example, has employed a multi-pronged approach since 2020, including issuing debt, using stock programs, and investing free cash flow directly into Bitcoin. Other companies are now following suit, using similar strategies with slight variations.
The Risk of Debt
However, this strategy isn’t without risk. A prolonged Bitcoin downturn could be a major problem, especially for companies with significant debt. If Bitcoin’s price falls and the company’s share price drops below its net asset value (NAV), refinancing could become extremely difficult. This might force them to sell Bitcoin at a loss, potentially further depressing the price. Smaller companies, lacking the resources of a firm like Strategy, will be particularly vulnerable. While most companies are using equity financing, those with high debt levels could face margin calls and forced sales during a recession.
The Broader Impact
The trend towards corporate Bitcoin adoption has been accelerating. Events like El Salvador adopting Bitcoin as legal tender and the launch of Bitcoin ETFs have played a significant role. Even well-known companies like GameStop are getting in on the action. New firms are specifically built around Bitcoin holdings, while others are entering the market through reverse mergers.
The Future of Corporate Bitcoin
Experts predict even more companies will join the Bitcoin treasury game, potentially expanding to other cryptocurrencies like Solana and Ethereum. While some will undoubtedly fail, the overall market isn’t expected to collapse due to the prevalence of equity financing. However, highly leveraged companies remain a potential source of wider market instability.