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Businesses of all sizes are turning to Bitcoin as a strategic store of value, with major companies like MicroStrategy and Tesla, and small businesses like Tahini's and Real Bedford F.C., accumulating it to secure their financial stability and future growth.
Mark it, 2024 might’ve been a pivotal year for Bitcoin in corporate treasuries. As the phrase “strategic Bitcoin reserve” breaks the Internet, businesses of all sizes are looking at the hardest asset ever created and wondering. Should your SMEs save in ever-devaluating cash? Or should your business start accumulating something that holds its value over time… and might even increase in value?
The answer is simple, adding Bitcoin to your business’ corporate treasury might be the cheat code of the century.
Years from now, people will look back and wonder why the majority couldn’t see the obvious play. However, be aware: there are risks involved. In Theodore Roosevelt’s immortal words, “nothing in the world is worth having or worth doing unless it means effort, pain, difficulty.” Adding Bitcoin to your business’ corporate treasury is not the exception.
Let’s explore the opportunity, lay down the benefits and the risks, and check out a few case studies. Read this whole piece and you’ll be qualified to make a decision.
The answer is simple: inflation. The cause is clear: every government’s rampant money printing. All fiat currencies are constantly losing value, the only difference is the rate at which it's happening. What is an SME to do? Before Bitcoin, the answer was trying to find the less risky assets and pray those outperformed inflation or risk it all playing the investor’s game.
Thankfully, nowadays your small business can just purchase or accept Bitcoin as payment and call it a day.
Bitcoin is a volatile asset, sure, but treasuries are by definition not for day to day spending. No one, and we mean no one, has lost money on Bitcoin after keeping it locked for four years. The reason is simple: a full Bitcoin cycle is approximately four years, so anyone who can weather the storm and keep the treasury safe can benefit from what bitcoiners jokingly call number-go-up technology.
Of course, past behavior doesn’t guarantee future results, but the statistic still stands.
And, on the other hand, EVERYBODY who keeps locked fiat money for four years loses purchasing power.
In River’s business Bitcoin adoption report, they cover a scandalous but not surprising story. This is the setup:
“Apple is a notable example of a company that maintains a large treasury, exceeding $150 billion over the past decade. While highly diversified across various securities and foreign currencies, Apple’s treasury remains vulnerable to inflation due to the nature of its holdings.”
Even though Apple doesn’t hold its corporate treasury in cash, the company was still vulnerable to the evils of inflation. Like most companies at the moment, Apple didn’t consider adding Bitcoin to its corporate treasury. This is the result:
“Apple has seldom leveraged its balance sheet, spending less than $5 billion on acquisitions over the past decade. During the same period, its treasury lost the company over $15 billion in real terms—or after adjusting for inflation.”
How have corporations that did incorporate Bitcoin into their corporate treasuries performed? Let’s find out.
According to Bitbos’s Bitcoin Treasuries list, the top 5 public companies with Bitcoin on their balance sheet are:
And the Top 5 private companies with Bitcoin on their corporate treasury are
Keep an eye on them in the following years. As a marker, check out what Fidelity’s research study “Adding Bitcoin to a Corporate Treasury” concluded barely six months ago:
“Companies that chose to allocate to bitcoin have benefited from recent outperformance due to bitcoin’s value rising from under $40,000 in January 2024 to ~$70,000 in June 2024. For example, Block’s position of ~8,027 bitcoin accumulated from 2020 to 2024 is worth ~$550 million as of April 30, 2024, and MicroStrategy’s position of ~214,400 bitcoin is worth ~$14 billion. On the other hand, the value of cash has barely appreciated in absolute terms in 2024.”
Notably, the big dogs aren’t the only ones benefiting from adding Bitcoin to their balance sheet.
In Bitcoin circles, people are familiar with Tahini’s Middle Eastern restaurants and Real Bedford F.C., What Bitcoin Did’s Peter McCormack’s football club. Both SMEs, both very public about their Bitcoin affiliations and corporate treasury. Recently, Blink featured Maltese barbershop "Plan B," and their story highlights many points we’re making today:
“By holding onto Bitcoin instead of converting it immediately into euros, the business has banked on Bitcoin's excellent function as a store of value.
Over the years, as Bitcoin's value has increased, so too has the barbershop's financial stability.
The Bitcoin reserve has improved its balance sheet and creditworthiness, enabling better terms on loans.”
Back to Real Bedford F.C., this is a graph of a modest but incredibly valuable Bitcoin corporate treasury:
However, as mentioned, effort, pain, and difficulty are part of the equation.
Let’s face it, governments worldwide are still behind the times when it comes to Bitcoin. They simply don’t know how to handle an invention of this size. And a company, this article’s main subject, has to be in business with the authorities of its region. A silver lining in this matter is that governments and big businesses seem to be embracing Bitcoin and trying to incorporate it, but this development is not guaranteed.
In any case, some of the risks have to do with the government’s future relationship with Bitcoin:
Besides those, there are a few risks related to Bitcoin inherent characteristics:
MicroStategy and Deloitte’s report “Corporates investing in crypto” brings light to the last two points:
“Will the company custody the asset itself, or will it rely on third-party vendors? Self-custody may provide easy access to the assets, but it also presents additional risk in terms of accidental loss, who conducts transactions, and how transactions are monitored and recorded. Given the inherent complexity and risk associated with self-custody, more and more companies are resorting to third-party custodians.”
A third-party custodian opens up a can of worms and removes one of Bitcoin’s main characteristics, its trustlessness. And even though it seems like the way to go for big corporations, it remains to be seen if these middleman institutions can handle the challenges, temptations, and technical issues that a responsibility of this size entails.
Not too long ago, in the US, companies were required by law to report losses every time Bitcoin dipped in price even if they didn’t sell their assets. The weird thing was that the “lower of cost or market method” didn’t allow the companies to record a win unless they sold. This discrepancy could’ve portrayed a warped version of the company’s financial health.
Thankfully, that changed. Let’s go back to Fidelity’s research study for an explanation:
“In December 2023, the Financial Accounting Standards Board (FASB) updated its guidelines for how companies should account for and report bitcoin and other digital assets on their corporate balance sheets. These new rules benefit companies that hold bitcoin by allowing them to use fair value accounting, finally allowing companies to also mark assets up to market. Previously, companies were only allowed to mark digital asset positions down.”
However, that’s only in the US. How does the government handle accounting in your business’s jurisdiction? That’s a crucial question that your team has to analyze while considering adding Bitcoin to the corporate treasury.
It’s as River’s business Bitcoin adoption report carefully puts it:
“When performed successfully, a business treasury strikes a balance between risk mitigation and the preservation—or even accumulation—of wealth. While common treasury assets today offer short-term stability, they often erode value over the long term, as shown in the case of Apple. Bitcoin can benefit businesses by both mitigating certain risks and, when properly allocated, preserving value over time.”
Emphasis on “when performed successfully” and “when properly allocated.” Please, remember and analyze the risks. There are no round twos in Bitcoin.
Why wouldn’t a business that accepts Bitcoin immediately convert it to fiat instead? If the business has expenses, do it and pay them. We’re talking treasuries here. How can a business leverage the accumulation of Bitcoin? Perform this experiment: create a corporate treasury or simply add Bitcoin to the balance sheet if you already have one. The money you’re not using, your reserve for a rainy day, put it in Bitcoin and custody it well.
It might be the decision that takes your business to the next level.
It might be the strategy that puts you over your competition.
As Bitcoin takes over the world, as Satoshi said, “it might make sense just to get some in case it catches on.” That motto applies to individuals and small businesses alike.
