Corporate Bitcoin Adoption: A Growing Trend
Over the past few years, a notable trend has emerged: the increasing adoption of Bitcoin (BTC) as a treasury asset by tech companies. Companies such as KULR Technology Group Inc., Hut 8 Corp., MARA Holdings Inc., and MicroStrategy are among those integrating Bitcoin into their financial strategies. This shift has been further bolstered by the introduction of new exchange-traded funds (ETFs), with Bitwise and Strive leading the charge.
The “IT Strategy” of Bitcoin
Several factors contribute to Bitcoin’s appeal as a treasury asset.
KULR Technology Group Inc., an energy management platform based in the U.S., has entered the Bitcoin market with a significant investment, acquiring 217.18 BTC at an average price of $96,556.53 per coin. The company’s total investment in Bitcoin totaled approximately $21 million, with plans to allocate up to 90% of its additional cash into BTC. Using Coinbase Prime for a self-custodial wallet solution, KULR demonstrates a commitment to managing its digital assets directly.
Hut 8 Corp., a prominent Bitcoin miner in North America, has also embraced Bitcoin through its holdings. The company announced that it had acquired 990 BTC coins at an average price of approximately $101,710 per Bitcoin. This investment, totaling $100 million, brings Hut 8 Corp.’s total holdings to 10,096 Bitcoins, valued at over $1 billion as of December 18. The company believes this positions it among the top ten corporate Bitcoin holders globally.
MARA Holdings Inc. has further scaled up its Bitcoin acquisition, with a total of 40,435 BTC coins, valued at $3.9 billion. The company invested $1.1 billion to acquire an additional 11,774 Bitcoins. These acquisitions were facilitated through zero-coupon convertible note offerings, with an average price of $96,000 per BTC. MARA Holdings Inc. also reports a Bitcoin yield of 47.6%.
On November 25, Rumble Inc. announced the allocation of $20 million in surplus cash to corporate Bitcoin reserves, signaling its interest in digital assets. The video-sharing platform believes it is in the early stages of Bitcoin adoption, and is now planning to become one of the leading platforms that delivers video and cloud services to the crypto community.
New ETFs Fueling Adoption
The increasing adoption of Bitcoin has also spurred the creation of new investment vehicles like ETFs.
Bitwise plans to launch the “Bitcoin Standard Corporations ETF”, which will focus on companies holding over 1,000 BTC. These companies must also meet liquidity and size requirements, including a market capitalization exceeding $100 million and a public free-float below 10%. Additionally, their average daily liquidity should exceed $1 million.
Strive intends to introduce a unique “Bitcoin Bond ETF,” targeting companies that have invested heavily in Bitcoin bonds. This ETF will invest in convertible securities from companies such as MicroStrategy.
Wintermute Analyst Predictions
According to Jake Ostrovskis, an analyst at Wintermute, the trend of corporate Bitcoin adoption is likely to accelerate in the near future. Ostrovskis predicts a rise in Bitcoin adoption by numerous companies, including small and medium-sized enterprises (SMEs) creating BTC treasuries by 2025. “It’s probably only a matter of time until a company transforms itself into an Ethereum investment vehicle, becoming the MicroStrategy of that space,” he said.
Ostrovskis observes that the rise of Bitcoin acceptance complements the BTC ETFs. He thinks that companies will adopt more quickly as they have more financial flexibility than institutional investors.
The FOMO Effect?
MicroStrategy, a pioneer in corporate Bitcoin adoption, has acquired $10 billion worth of BTC and plans to use equity financing for another $42 billion in Bitcoin. The company sets an example that potentially creates a fear of missing out among corporations and institutions. Companies such as Rumble Inc., KULR Technology Group Inc., Hut 8 Corp., and MARA Holdings Inc., are all, therefore, adopting BTC treasuries. Riot Platforms (RIOT) and Marathon Digital (MARA) are also following the trend of managing additional Bitcoin holdings.
In conclusion, while the market shows an increasingly optimistic outlook toward Bitcoin, it is important that investors carefully consider their personal risk tolerance and conduct thorough research before investing in the cryptocurrency.
