Holding Companies: Exploring Bitcoin Investment Opportunities

Holding companies have been investing in Bitcoin for several years now, with the cloud software company MicroStrategy making headlines in 2020 when it bought $425 million worth of Bitcoin. Since then, many other major institutional investors have followed suit, including Tesla, Square, Coinbase, and Marathon Digital. As of May 2025, MicroStrategy holds 214,400 BTC in reserve, equivalent to more than 1% of the total number of Bitcoin that will ever be issued.

Companies that have invested in Bitcoin

As of 2024, several companies have invested in Bitcoin, with public companies holding Bitcoin accounting for just under 1.5% of the total supply of 21 million BTC. Here is a list of some of the notable companies that have made significant investments in Bitcoin:

• MicroStrategy Inc: As of May 2025, MicroStrategy holds 214,400 BTC, worth approximately $14.8 billion. The company's CEO, Michael Saylor, has been a vocal advocate of Bitcoin, even converting a significant portion of MicroStrategy's treasury into cryptocurrency.
• Marathon Digital Holdings: Marathon is a crypto mining company with 10,054 BTC as of 2023. As of May 2024, the company holds 17,631 BTC in its corporate treasury, worth around $1.23 billion.
• Coinbase Global Inc: Coinbase, one of the largest crypto exchanges globally, holds 9,000 BTC as of 2023. By June 2024, its holdings were valued at just under $642 million.
• Tesla: Electric vehicle manufacturer Tesla invested $1.5 billion in Bitcoin in December 2020. While the company has sold a portion of its holdings, it remains a significant investor in Bitcoin.
• Hut 8 Mining Corp: Hut 8 is a crypto mining company that has diversified its portfolio by investing in Bitcoin. As of June 2021, the company was listed on the Nasdaq Global Select Market, and as of May 2024, it holds 9,109 BTC, worth around $644 million.
• Riot Platforms, Inc.: Riot Blockchain is a U.S.-based crypto mining company that holds 9,084 BTC as of June 2024, valued at approximately $643 million.
• Galaxy Digital Holdings: Founded by Michael Novogratz in 2018, Galaxy Digital Holdings has partnered with several crypto firms. As of July 2022, the company held 16,400 BTC, and by June 2024, the value of its holdings had increased to nearly $578 million.
• Block (formerly Square): Block, led by CEO Jack Dorsey, has made significant investments in Bitcoin technology. As of June 2024, the company held 8,027 BTC, worth around $573 million.
• CleanSpark: CleanSpark is a U.S.-based Bitcoin mining company that has expanded its operations ahead of the 2024 Bitcoin halving. As of June 2024, the company holds 6,154 BTC, worth approximately $439 million.
• Bitcoin Group SE: This Germany-based venture capital firm was created through the merger of crypto exchange Bitcoin.de and Futurum bank in October 2020, forming Germany's first crypto bank.

These companies have recognized the potential of Bitcoin and the broader cryptocurrency market, and their investments reflect a growing trend of institutional adoption of digital assets.

How to invest in Bitcoin as a company

Investing in Bitcoin as a company is a complex process that requires careful consideration and planning. Here is a step-by-step guide on how a company can invest in Bitcoin:

Understanding the Risks and Volatility of Bitcoin:

Before investing, companies should be aware of the risks associated with Bitcoin. The price of Bitcoin is highly volatile and subject to significant price swings. Regulatory changes and government policies can also impact the value of Bitcoin. It's important to thoroughly research and understand the market before investing.

Allocating Investment Funds:

Companies should decide how much of their portfolio they want to allocate to Bitcoin. It's generally recommended that investors should not invest more than 10% of their portfolio in risky assets like Bitcoin. Companies should carefully assess their investment goals, risk tolerance, and financial situation before determining the allocation.

Choosing a Cryptocurrency Exchange:

Companies can purchase Bitcoin through a cryptocurrency exchange, such as Gemini, Kraken, Coinbase, or River. These exchanges allow users to transfer funds from their corporate bank account and place orders on their order book. It's important to select a reputable and well-known exchange that offers dedicated corporate accounts and has strong security measures in place.

Signing Up for a Corporate Account:

The first step is to sign up for a corporate account on the chosen cryptocurrency exchange. This is a crucial step as, in many jurisdictions, it is more complicated to let "others" buy assets under the company's name. A corporate account will also provide higher funding limits and better customer support compared to personal accounts.

Transferring Funds:

Once the corporate account is set up, the company needs to transfer funds (euros, dollars, pounds, etc.) from their corporate bank account to the exchange. It's important to ensure that the company's bank allows transfers to and from crypto exchanges.

Placing a Buy Order:

After the funds have arrived on the exchange, the company can place a buy order for Bitcoin. There are two main types of orders: "market orders" and "limit orders". A market order is placed at the current Bitcoin price, while a limit order allows the company to indicate the price they are willing to pay.

Storing Bitcoin:

Once the company has purchased Bitcoin, they need to decide how to store it securely. There are two main options: third-party custody or self-custody. Third-party custody involves leaving the Bitcoin in the custody of the exchange where it was purchased. Self-custody means withdrawing the Bitcoin from the exchange and storing it in a private Bitcoin wallet, such as a hardware wallet.

Tax Implications:

Companies also need to consider the tax implications of investing in Bitcoin. The tax treatment of cryptocurrency transactions varies by country. In the US, for example, purchasing Bitcoin is not a taxable event, but selling Bitcoin is. Companies should consult with tax professionals to understand the specific tax regulations in their jurisdiction.

Diversification:

Companies may also consider diversifying their crypto investments by investing in other cryptocurrencies or crypto-related assets, such as crypto funds, crypto stocks, or crypto exchange-traded funds (ETFs). This can help reduce the overall risk of their investment portfolio.

Monitoring and Reviewing:

Finally, companies should periodically review their crypto investments and assess the need to rebalance their holdings. The cryptocurrency market is highly dynamic, and companies should stay updated with new developments and market trends to make informed investment decisions.

Tax implications of holding Bitcoin as a company

The tax implications of holding Bitcoin vary depending on the country in which the company is domiciled. Here is a summary of the tax treatment of Bitcoin in the US, Germany, and the UK.

United States

In the US, buying Bitcoin with USD or another fiat currency is not a taxable event. However, when a corporation holds Bitcoin for investment purposes, there are financial reporting considerations to keep in mind. A taxable event occurs when Bitcoin is sold or exchanged for USD or another fiat currency. The IRS treats cryptocurrencies as property, so the tax principles that apply to property or barter transactions also apply to crypto transactions.

The amount of tax liability depends on the gain or loss recognised. A capital gain occurs when Bitcoin is sold for more than its purchase price, and the cost basis includes any fees, commissions, and other acquisition costs. Corporations can offset gains with losses for tax purposes, and net capital gains are taxed at ordinary rates. If capital losses exceed capital gains, those losses can be carried back up to three years and then forward for five years to offset capital gains.

Germany

In Germany, the difference between private and business assets is significant. For business assets, there is no concept of a taxable event. Instead, a German business must reflect every transaction (both buys and sells) in its accounting. The profit and loss are then calculated at the end of the year based on the overall properties of the company in the balance sheet.

Cryptocurrencies must be included in the balance sheet as they are considered assets under the principle of completeness from § 246 para. 1 sentence 1 HGB. They are generally accounted for according to the strict lowest value principle, meaning that the lowest value of three possible values (acquisition or production costs, stock exchange or market price, and value on the balance sheet date) is used for current assets.

United Kingdom

In the UK, a company pays corporation tax on profits from doing business, investment income and gains, and chargeable gains on the disposal of assets. If a company holds cryptocurrency as part of its trade, the profit is included in the trading profit. Cryptocurrency is not considered a currency in the UK, and it does not fall under loan relationship rules as there is typically no counterparty to transactions.

Instead, cryptocurrency is considered an intangible asset and a chargeable asset for tax purposes as it meets the criteria of being capable of being owned and having a realisable value. Therefore, if a company holds crypto as an investment rather than part of its trade, the disposal of the cryptocurrency will result in a chargeable gain or loss. The company will pay corporation tax (19% as of the 2019-20 tax year) on any chargeable gain, and a 'disposal' is broadly defined to include exchanging crypto for money, exchanging it for another cryptocurrency, using it to pay for goods or services, and gifting or donating it.

Record-Keeping and Reporting

Regardless of the specific tax treatment in each country, companies holding Bitcoin should keep careful records of their transactions, including the fair market value of the Bitcoin when acquired and when sold, exchanged, or used. While some exchanges may issue a Form 1099-K for those transacting more than $20,000 and 200 times in a year, it is ultimately the responsibility of the taxpayer to report the correct amounts and keep track of gross proceeds and taxable gains or losses.

Tax Software and Tools

To assist with tax declaration and compliance, companies can use tax calculators or cryptocurrency accounting tools. Tax calculators, such as TokenTax and Taxbit, allow companies to connect their crypto wallets and exchange accounts to track performance and populate tax forms. Accounting tools, such as SoftLedger and Cryptio, serve as bookkeeping platforms that convert crypto transactions into usable data for accounting and finance purposes.

Pros and cons of investing in Bitcoin

Pros of Investing in Bitcoin

• Bitcoin is the first-ever cryptocurrency, making it a prestigious and desired asset.
• It is the most well-known cryptocurrency, and most crypto traders start with Bitcoin before moving on to other cryptos.
• Bitcoin is decentralised, meaning there are no centralised authorities or central banks that may impose high fees or restrictions.
• It is global, so there are no exchange rates to deal with.
• You don’t need a fortune or credit history to invest in Bitcoin.
• Bitcoin is highly liquid and is among the most liquid investment assets, especially in the crypto market.
• It is transparent – it is a public ledger that allows everyone to see transactions as they are stored permanently on the blockchain.
• Bitcoin is an excellent way to diversify your portfolio.
• Because of its supply cap of 21 million coins and decentralised nature, some believe that Bitcoin is immune to economic turmoil, geopolitical problems, and inflation.
• Bitcoin has various valuable business features, such as multi-signature authorisation, that can improve transparency and security in business settings.
• Figures show that Bitcoin has a significant ROI compared to other assets.
• It is the safest crypto asset to invest in due to the high number of users across the globe helping to decentralise the network.
• Huge names have become major investors in Bitcoin and have been very vocal in their support.
• Smart contracts can be built on Bitcoin.
• It is a hedge against inflation.

Cons of Investing in Bitcoin

• Bitcoin is highly volatile.
• Bitcoin transactions are quite slow – any transaction can take up to 10 minutes, and even longer on busy days.
• Bitcoin has limited use and depends on internet availability.
• Bitcoin is not 100% safe – it can still be stolen if you hold your Bitcoins on an exchange.
• Bitcoin investing is not regulated – there is little regulatory oversight, and crypto regulations and taxation vary across the globe and are often unclear, controversial, or non-existent.
• Bitcoin is misunderstood and is still veiled in misconception. Many associate it with illegal services and crypto scams, which makes cryptocurrency adoption difficult.
• Bitcoin is not energy-efficient – it uses as much power as Sweden.
• It will not make our financial system fairer – Bitcoin is now dominated by excessively big investors who could easily influence the price by selling off.
• Community disagreements have split Bitcoin before, which can be very discouraging for investors.
• Quantum computers are coming, and a quantum computer could overpower the Bitcoin network.
• Bitcoin doesn’t work as intended – not many people use Bitcoin for its original purpose; many just hold it because they believe it will increase in value.
• Satoshi Nakamoto’s identity and disappearance raise many questions.

How to store Bitcoin

Storing Bitcoin safely is crucial, as neglecting to do so can result in the loss of funds. There are several ways to store Bitcoin, each with its own advantages and disadvantages. Here are some detailed instructions on how to store Bitcoin securely:

Understand the Different Types of Wallets:

• Custodial wallets: These involve a third party, such as an exchange, that manages your private keys. Examples include popular exchanges like Coinbase, which offer custodial hot wallets.
• Non-custodial wallets: In this case, you have full ownership and control of your private keys. This can be in the form of a hardware wallet or a self-custody mobile wallet.
• Hot wallets: These wallets are connected to the internet, making it convenient to access your funds. However, they are more vulnerable to hacks and theft. Examples include desktop, mobile, and web-based wallets.
• Cold wallets: Cold wallets are offline and considered much safer than hot wallets. They can be in the form of hardware wallets or paper wallets.

Choose the Right Wallet for Your Needs:

• Hardware wallets: These are small devices similar to USB drives that store your private keys offline. Examples include Ledger, Trezor, and Coldcard. They offer a high degree of security but may be confusing for less technical users and have a cost associated with them.
• Mobile wallets: These are smartphone apps that allow easy access to your funds for transactions. While convenient, they are less secure and not recommended for storing large balances.
• Paper wallets: This involves printing out your private and public keys. It is a very affordable option but has a high risk of user error or wallet damage.
• Desktop wallets: These are programs that reside on your computer. They are not the safest option as they are connected to the internet and vulnerable to hacks.
• Web-based wallets: These wallets are hosted by a web service and are not secure, as you are essentially letting someone else store your keys.

Prioritize Security:

• Always back up your Bitcoin wallet regularly to prevent loss of funds due to computer failure or other issues.
• Keep your software and operating systems up to date to patch security vulnerabilities.
• Consider using a multi-signature wallet, which requires multiple keys from different people to sign a transaction, adding an extra layer of security.
• Use a strong password and encryption for your wallet and any backup copies you create.
• For hardware wallets, disconnect them from any devices when not in use and store them in a secure location.
• For paper wallets, make multiple copies and store them in separate secure locations to prevent loss or damage.

Manage Your Bitcoin Holdings:

• It is recommended to use a combination of hot and cold wallets to balance security and usability.
• For large sums of Bitcoin, prioritize cold storage on a hardware wallet for the majority of your funds, and keep a small balance in a hot wallet for quick transactions.
• If you are just starting with Bitcoin and have a small amount, an exchange wallet or a mobile wallet might be sufficient, but always assess the risks.
• If you plan to buy Bitcoin regularly, consider investing in a good hardware wallet and learning how to use it properly for long-term storage.
• For very large amounts of Bitcoin, consider a "multi-signature" setup with multiple hardware wallets for added security.

Remember, there is no single best way to store Bitcoin, and it depends on your individual needs and circumstances. Always do your research, prioritize security, and stay up to date with the latest recommendations for storing your Bitcoin safely.

Frequently asked questions