An increasing number of companies are acquiring bitcoin, wagering on benefits rather than dangers.

By David Yaffe-Bellany and Joe Rennison

A few weeks following the presidential election, Joe Davy, the CEO of Banzai, reached out via email to the company’s board: He proposed that Banzai kick off its bitcoin acquisitions.

At first glance, diving into the unpredictable realm of cryptocurrencies seemed unusual for Banzai, a Nasdaq-listed entity recognized for its corporate webinar service. However, the election of Donald Trump, who endorsed bitcoin during his campaign, invigorated the crypto sector and triggered soaring prices. Davy contended that this investment would safeguard the firm’s finances against potential inflation risks to the U.S. dollar, a frequent yet widely debated assertion among crypto advocates.

On Nov. 26, Banzai declared its intention to allocate as much as 10% of its corporate treasury assets to bitcoin. (According to its latest quarterly report, the company had $4.3 million in cash.) “The conversation was quite straightforward,” Davy remarked in a discussion. “It makes sense to hold this asset.”

As the value of bitcoin has surged, a modest but increasing number of businesses unrelated to crypto — like Banzai — have begun to acquire reserves, partially tying their financial stability to the erratic digital currency market.

These investments mark a significant shift from the conservative strategies of traditional corporate treasury departments, which usually emphasize cash preservation over pursuing higher returns. Standard reserve assets typically consist of reliable, stable securities such as U.S. Treasury bonds and money market accounts.

“I struggle to comprehend how a cautious board could deem an investment in digital assets reasonable, knowing the significant volatility,” commented Naresh Agarwal, an associate director at the Association of Corporate Treasurers, a trade association. “The market remains quite opaque.”

Companies engaging in crypto purchases are following in the footsteps of MicroStrategy, a business analytics software provider that began stockpiling bitcoin in 2020. The firm has since accumulated a bitcoin reserve valued over $40 billion, overshadowing its software enterprise. Michael Saylor, the executive chair of the company and a previous bitcoin critic, has evolved into a notable advocate for the cryptocurrency.

This approach has yielded remarkable returns for investors: MicroStrategy’s stock has surged more than 2,000% in the past four years. The company now serves as a proxy for bitcoin’s price, which was approximately $12,000 per coin when it started amassing bitcoin, climbing to a historic high of $100,000 last month.

According to estimates, over 70 publicly traded firms now invest in bitcoin, including many that began purchasing during Trump’s promotion of crypto last year. While several of those enterprises directly operate within the crypto sector, like Coinbase, the well-known U.S. exchange, the roster is expanding. Rumble, a conservative-leaning social media platform, declared in November its plans to allocate up to $20 million for bitcoin. Other companies that have invested in the asset range from a medical technology supplier to a cannabis cultivator and Tesla, the electric vehicle manufacturer founded by Elon Musk.

“We are merely believers,” stated Bruce Rodgers, the CEO of LM Funding, a company initially established for real estate debt collection that transitioned to bitcoin mining a few years ago and held over $14 million worth of cryptocurrency in mid-December. “We aim to gather as much coin as we can.”

The increasing corporate embrace of bitcoin signifies that the cryptocurrency, once regarded as a fleeting trend, has gained a degree of mainstream credibility. Such purchases also expose more investors, knowingly or otherwise, to the unpredictable nature of cryptocurrencies, which can experience sudden spikes and steep declines. In December, MicroStrategy was included in the Nasdaq-100 index, a fundamental component of college savings plans and retirement portfolios.

“It’s going to integrate crypto and its volatility into more portfolios, regardless of whether those investors are making intentional choices,” stated Lee Reiners, a former Federal Reserve official now teaching at Duke University Law School.

Bitcoin was not originally intended as a corporate investment avenue. It was conceived to establish an alternative financial framework enabling individuals to transfer funds without depending on banks or other middlemen. Early proponents also perceived it as a long-term value store, designed with a capped supply so that no more could be created by governments.

The value of bitcoin has seen significant fluctuations over the years, plummeting in late 2022 after a series of sector bankruptcies and soaring once again last year as Trump hinted at deregulation.

As bitcoin prices began to rise in 2024, Semler Scientific, a California-based company that manufactures medical devices and develops disease detection software, concluded on a new strategy for utilizing its reserves. The firm had considered allocating its funds to acquire other businesses or repurchase its own stocks, both common applications of corporate cash.

Ultimately, the company opted to invest nearly all its cash reserves, aside from what was required for daily operations, into bitcoin starting in May. Eric Semler, the company’s chair, mentioned in an interview that he had spoken with managers from substantial funds that were barred from investing in crypto and were seeking alternative avenues to access its lucrative returns.

“There aren’t many substitutes for bitcoin in the stock market,” said Semler. “There are legitimate reasons to invest in businesses like ours or MicroStrategy that are distinct.” This suggests that the company could benefit from both the escalating value of its bitcoin holdings and increased interest in its stock as an alternative crypto investment. The firm’s stock price has surged more than 80% over the last six months.

Shortly after the election, Rumble’s CEO, Chris Pavlovski, contemplated on social media the possibility of incorporating bitcoin into his company’s financial statements. MicroStrategy’s Saylor responded: “I would be glad to discuss the reasons and methods with you.”

They eventually had a phone conversation, and on Nov. 25, Rumble announced its plan to invest up to $20 million of its surplus funds in bitcoin, citing the “election of a crypto-friendly U.S. presidential administration.” Rumble’s stock has appreciated about 70% in the last month, partially due to substantial investment from Tether, a crypto firm.

Rumble representatives did not respond to a request for commentary.

Not everyone has welcomed the corporate bitcoin acquisitions. Davy from Banzai noted that he received some anxious calls from shareholders following the company’s announcement of its strategy. In the lead-up to the news, Banzai had restructured its debts and executed a 1-for-50 reverse stock split to preserve its stock listing after its price dropped excessively.

“People had differing opinions,” he reflected on the bitcoin strategy. “I received a few calls from individuals saying: ‘What in the world is happening over there? What are you thinking?’”

Yet, as the market has surged, some firms have taken steps to distance themselves from crypto, highlighting the limits of bitcoin’s allure. Last year, Reddit liquidated the majority of its crypto assets shortly after disclosing bitcoin as part of its treasury.

In December, the Free Enterprise Project, a conservative advocacy organization, introduced a motion at Microsoft’s shareholder meeting urging the company to contemplate adding bitcoin to its balance sheet. Saylor commended the initiative on social media and delivered a presentation to shareholders. The proposal, opposed by Microsoft’s executive team, was overwhelmingly rejected, with only about 0.5% of shareholders supporting it.

“I suppose this indicates that mainstream investors remain somewhat oblivious to the opportunity,” Saylor remarked in an interview. “It will appear on many more agendas.”

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