Bitcoin Investors: Exploring Corporate Interests In Crypto

Bitcoin is the largest blockchain-based digital asset and has become increasingly popular among investors. While individuals once held the most bitcoin, exchanges, brokerages, and businesses have now taken over as the largest bitcoin holders. The top public companies with the biggest bitcoin portfolios include MicroStrategy, Tesla, Coinbase, Marathon Digital Holdings Inc, Riot Platforms Inc, and Hut 8 Mining Corp. The approval of spot bitcoin ETFs in January 2024 further fuelled business interest in bitcoin.

Tesla Motors' $1.5 billion investment

The decision to invest in Bitcoin was driven by Tesla's desire to diversify and maximise returns on its cash holdings. With more than $19 billion in cash and cash equivalents at the end of 2020, Tesla sought to invest in reserve assets such as digital currencies, gold bullion, or gold exchange-traded funds. This strategy reflects a broader trend of corporates leveraging the volatility of the cryptocurrency market to generate returns.

Tesla's investment in Bitcoin is also closely linked to the actions and statements of its CEO, Elon Musk. Known for his influence on cryptocurrency prices through his Twitter posts, Musk had previously added the hashtag #bitcoin to his Twitter bio, causing a brief surge in the currency's value. In a Clubhouse interview, Musk expressed his support for Bitcoin, stating that it was "on the verge of getting broad acceptance by conventional finance people."

The impact of Tesla's investment was immediate, with Bitcoin prices surging to new highs and reaching a price of at least $44,200. This move propelled the cryptocurrency's market value past $1 trillion for the first time. While Tesla's investment represents a relatively small percentage of its total assets, it has had a significant impact on the perception and value of Bitcoin.

Tesla's embrace of Bitcoin is part of a broader trend of mainstream companies taking an interest in cryptocurrencies. Payment company Square and business intelligence platform MicroStrategy have also made significant investments in Bitcoin, contributing to its growing legitimacy and acceptance. Despite warnings about the volatility of the cryptocurrency market, Tesla's move has accelerated the integration of Bitcoin into the traditional financial system.

MicroStrategy's $2.19 billion investment

MicroStrategy, a Virginia-based business intelligence firm, has made significant investments in Bitcoin, the world's largest cryptocurrency. As of August 2024, the company holds 226,500 Bitcoins, making it the largest public holder of Bitcoin. MicroStrategy's journey with Bitcoin began in August 2020 when it announced its plan to invest in the cryptocurrency. Since then, the company has consistently increased its Bitcoin holdings through multiple purchases.

In February 2024, MicroStrategy added 3,000 Bitcoins worth $155 million to its balance sheet, bringing its total holdings to around 193,000 Bitcoins. This move reaffirmed the company's commitment to its Bitcoin acquisition strategy. The company's strong belief in Bitcoin is largely attributed to its chairman and ex-CEO, Michael Saylor, one of the cryptocurrency's most prominent evangelists.

In the second quarter of 2024, MicroStrategy continued its Bitcoin buying spree, purchasing an additional 12,222 Bitcoins for $805 million. This acquisition pushed its total Bitcoin holdings to 226,500 Bitcoins, valued at approximately $14.7 billion based on current prices. The company has financed these purchases through various means, including income from its software business and the sale of convertible debt and class A shares.

MicroStrategy's deep conviction in Bitcoin is evident in its consistent investments, even during periods of market volatility and price fluctuations. The company has experienced both gains and losses due to its Bitcoin holdings, reflecting the inherent risks and potential rewards associated with the cryptocurrency market. Despite the ups and downs, MicroStrategy remains committed to its Bitcoin strategy, solidifying its position as a leading institutional investor in the cryptocurrency space.

In August 2024, MicroStrategy announced plans to sell $2 billion worth of class A shares to invest in Bitcoin and for other corporate purposes. This move underscores the company's unwavering belief in the potential of Bitcoin and its long-term outlook for the cryptocurrency. While the broader market sentiment has been negative at times, with Bitcoin prices experiencing declines, MicroStrategy's leadership remains optimistic about the future of Bitcoin.

Square's $220 million investment

In October 2020, the digital payments company Square, run by Twitter CEO Jack Dorsey, made its first major investment in Bitcoin, purchasing $50 million worth of tokens. This was followed by a $170 million investment in February 2021, when it bought approximately 3,318 bitcoins at an average price of $51,236. This signalled significant confidence in Bitcoin, as it reached record highs and invited renewed scepticism about its stability.

Square's investment in Bitcoin is part of its ongoing commitment to the cryptocurrency, and the company has stated that it plans to assess its aggregate investment in Bitcoin relative to its other investments on an ongoing basis. In April 2024, Square's payment services subsidiary announced that it would enable businesses using its Cash App product to automatically convert a portion of their daily sales into Bitcoin. Furthermore, in May 2024, the firm announced that it would reinvest 10% of its profits from Bitcoin-related products and services into Bitcoin in a dollar cost average (DCA) purchase programme.

Square's CEO, Jack Dorsey, has been a vocal supporter of Bitcoin for years, tweeting that:

> "#Bitcoin (aka 'crypto') is direct activism against an unverifiable and exclusionary financial system which negatively affects so much of our society. Important to at *least* acknowledge and connect the related societal issues your customers face daily."

Square has also invested in Bitcoin technology, launching its own Bitcoin wallet and developing a Bitcoin mining ASIC chip. In December 2021, the company changed its name to Block, in an apparent reference to the blockchain technology that underpins Bitcoin.

Marathon Digital Holdings Inc's investment

Marathon Digital Holdings Inc. (NASDAQ: MARA) is an American digital asset technology company that has been mining Bitcoin since its founding in 2010. Headquartered in Fort Lauderdale, Florida, Marathon Digital Holdings has grown from a small team to over 100 employees.

The company focuses on utility-scale mining, energy harvesting, and proprietary technologies to enhance efficiency and reduce energy costs. They leverage location-agnostic data centres to find the cheapest power sources and optimise operations. Marathon Digital Holdings has a strategy of holding all the Bitcoin it mines, only selling to reinvest in enhanced mining operations. As of May 31, 2024, the company owned 17,857 Bitcoins, with a current installed hash rate of 30.6 EH/S.

In December 2023, Marathon Digital acquired two operational Bitcoin mining sites from subsidiaries of Generate Capital for $178.6 million. The company has also made significant investments in Bitcoin mining equipment, including a joint venture to use 37 MW from the Hardin Generating Station Montana coal plant to power an adjacent Marathon bitcoin data centre.

In August 2024, Marathon Digital Holdings, Inc. completed a $300 million offering of 2.125% Convertible Senior Notes due in 2031, using the proceeds to purchase $249 million worth of Bitcoin. This move demonstrates the company's continued commitment to bolstering its Bitcoin holdings and its long-term strategy in the cryptocurrency market.

Riot Platforms, Inc.'s investment

Riot Platforms, Inc. is a Bitcoin mining and digital infrastructure company headquartered in Castle Rock, Colorado. The company operates a Bitcoin-driven infrastructure platform and has Bitcoin mining operations in central Texas and Kentucky. Riot Platforms also has electrical switchgear engineering and fabrication operations in Denver, Colorado.

Riot Platforms' Bitcoin Mining segment engages in Bitcoin mining activities, while its Engineering segment designs and manufactures power distribution equipment and custom-engineered electrical products. The company's Engineering segment also provides electricity distribution product design, manufacturing, and installation services for a range of clients across markets such as data centres, power generation, utilities, water, industrial, and alternative energy.

In terms of specific investments, Riot Platforms has invested in Verady, Coinsquare, and Tess. The company also recently announced the acquisition of Block Mining, which expanded its total potential power capacity to 2 gigawatts. Riot Platforms has also been increasing its stake in rival Bitfarms, and as of August 2024, it held an 18.9% stake in the company.

Riot Platforms owns and operates North America's largest Bitcoin mining facility in terms of developed capacity. The company's focus on Bitcoin mining and related infrastructure has positioned it as a leader in the industry.

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