Big Business Bitcoin Bets: Why Take The Risk?

Bitcoin is the largest blockchain-based digital asset and is extremely popular among cryptocurrency enthusiasts and speculative investors. In the past, individuals held the most bitcoin as an investment, but today, exchanges, brokerages, and businesses have taken over as the largest bitcoin holders. The approval of spot bitcoin ETFs in January 2024 was a significant milestone, leading to businesses accounting for the most bitcoin held. This includes brokerages, exchanges, business intelligence and analysis companies, and venture capital groups.

Some of the world's largest publicly traded companies have also invested heavily in bitcoin, including MicroStrategy, Tesla, Coinbase, and Block. These companies have collectively purchased billions of dollars worth of bitcoin, with MicroStrategy alone holding over 200,000 bitcoins as of May 2024. As a result, their share prices have skyrocketed, with MicroStrategy's shares soaring over 350% in 2023.

The reasons behind these investments vary, with some companies adopting bitcoin as their primary reserve asset, while others see it as a way to provide liquidity to customers and enable them to buy products with cryptocurrency. The institutional support for bitcoin has contributed to its surge in price, and as bitcoin continues to mature, it is likely that more public companies will follow suit.

Diversification of business model

Large companies invest in Bitcoin to diversify their business models. Bitcoin is the largest blockchain-based digital asset, and its success over the past decade has attracted the attention of investors. While some traditional investors view cryptocurrencies as a risky and volatile investment, others have recognised the benefits of diversifying their portfolios by including Bitcoin.

The Modern Portfolio Theory, a widely used model in the financial industry, assumes that investors are generally risk-averse and that risk can be reduced through diversification. By adding Bitcoin to a traditional portfolio, investors can increase returns without increasing risk. This is due to Bitcoin's low correlation with other asset classes, which moves the efficient frontier up. As a result, a small allocation of Bitcoin can significantly improve overall portfolio performance.

The success of this strategy is evident in the example of MicroStrategy, a prominent business analytics platform that has aggressively pursued a Bitcoin buying spree. As of May 2025, the company holds 214,400 BTC in reserve, equivalent to $14.8 billion. MicroStrategy's CEO, Michael Saylor, has been a vocal proponent of Bitcoin, stating that the company's adoption of a "Bitcoin strategy" has enabled it to outperform its rivals.

Other large companies have also recognised the benefits of diversifying into Bitcoin. For instance, Tesla, the well-known electric vehicle manufacturer, invested $1.5 billion in Bitcoin in December 2020. While Tesla has had an on-off relationship with Bitcoin, selling a portion of its holdings during the crypto crash in 2022, it still holds a significant amount of Bitcoin on its balance sheet.

In conclusion, large companies invest in Bitcoin to diversify their business models and reduce risk. By adding Bitcoin to their portfolios, companies can increase returns without increasing volatility, as demonstrated by MicroStrategy and other corporate Bitcoin holders. As the world of cryptocurrency continues to evolve, it is likely that more large companies will recognise the benefits of diversifying their business models through Bitcoin investments.

To provide liquidity to customers

Liquidity is a fundamental part of both the crypto and financial markets. It refers to the ability to convert assets into cash quickly and efficiently, without drastic price swings. In other words, it is the ease with which an asset can be bought or sold in the market.

In 2021, Tesla invested $1.5 billion in Bitcoin to provide liquidity to customers who could buy its products with the cryptocurrency. However, the following year, Tesla sold a large share of its holdings at a steep loss during the crypto crash.

Liquidity is essential for the success of any tradable asset, including Bitcoin. Liquid markets are deeper and smoother, while an illiquid market can put traders in difficult positions. The increased acceptance of Bitcoin at brick-and-mortar stores, online shops, and other businesses can help boost its liquidity. The more it is used as a medium of exchange, the more liquid Bitcoin becomes.

Additionally, the launch of Bitcoin-to-cash payment cards and ATMs boosts the usability and acceptance of Bitcoin, increasing liquidity while maintaining security. These payment cards and ATMs facilitate purchases and withdrawals at the market price, providing more ways to earn Bitcoins.

While Bitcoin and other cryptocurrencies trade 24 hours a day globally, they are less liquid than other asset classes. Transacting in Bitcoin or exchanging it for cash can come with extra costs and/or time delays.

Bitcoin's average 24-hour trading volume was between $9 billion and $100 billion in the first few months of 2024. For comparison, the average turnover in the forex market was about $7.5 trillion daily in 2022.

Improving liquidity can help reduce the risks associated with Bitcoin and other cryptocurrencies.

As a store of value

Bitcoin is a good store of value because it is scarce, durable, fungible, and easy to transport.

Firstly, Bitcoin has a fixed supply. There will only ever be 21 million bitcoins in existence, and this limit is programmed into the Bitcoin software. This scarcity means that any increase in demand will lead to an increase in the value of Bitcoin over time, making it a good store of value.

Secondly, Bitcoin is durable. As a digital asset, it does not deteriorate or degrade over time. It cannot be worn down by repeated use, unlike gold, which is a soft metal.

Thirdly, Bitcoin is fungible. One bitcoin is always identical to another bitcoin. It is not subject to impurities or serial numbers, unlike gold. This makes it easier to exchange and simplifies the verification process.

Finally, Bitcoin is easy to transport. It can be stored on a USB drive or accessed anywhere in the world with an internet connection. This portability also facilitates long-distance trade.

Other advantages of Bitcoin as a store of value include its divisibility, ease of verification, and resistance to seizure by governments or corporations.

To take advantage of its rising value

Bitcoin's value is influenced by its demand and limited supply. As a result, investors are keen to take advantage of its rising value.

Bitcoin's value is heavily influenced by supply and demand, like most commodities, assets, investments, or other products. Bitcoin's market value is determined by the number of coins in circulation and how much people are willing to pay for them. Bitcoin is limited to 21 million coins by design, and as the circulating supply approaches this limit, prices are likely to climb.

As a result, large companies are investing in Bitcoin to take advantage of its rising value. For example, MicroStrategy, a business analytics platform, has aggressively pursued a Bitcoin buying spree, scooping up millions of dollars worth of the cryptocurrency. As of May 2025, it holds 214,400 BTC in reserve, equivalent to $14.8 billion—more than 1% of the total number of Bitcoin that will ever be issued.

Tesla is another well-known company that has invested in Bitcoin. In 2021, the company announced it had bought $1.5 billion in Bitcoin to boost its bottom line and provide liquidity to customers who could buy its products with cryptocurrency.

Other companies with large Bitcoin holdings include Marathon Digital Holdings Inc., Hut 8 Mining Corp, Riot Platforms Inc., Coinbase Global Inc., and Galaxy Digital Holdings.

The rising value of Bitcoin is an attractive prospect for investors, and with more companies investing in Bitcoin, its value is likely to continue to increase.

As a form of economic empowerment

Bitcoin is a form of economic empowerment that allows people to store their wealth outside the control of oppressive regimes. It is an inflation hedge that can be transported across borders without detection and is difficult to confiscate. This makes it a valuable tool for people suffering from economic turmoil, such as those in Sudan, Afghanistan, Nigeria, and Cuba, where Bitcoin can protect their remaining wealth from the effects of inflation. Marginalized communities can also use Bitcoin to gain access to a global economic system that would otherwise exclude them.

Bitcoin is a permissionless network that does not discriminate based on identity or background. It only requires an internet connection to safeguard a person's financial future. This accessibility has led to Bitcoin's mass adoption, particularly in countries with struggling economies. For example, in Cuba, Bitcoin is a way to "get around punishing economic restraints" and "connect to the outside world" despite being cut off from traditional payment methods.

Bitcoin also has the potential to revolutionize the global remittance industry, which currently relies on payment networks that impose high fees on senders. In 2020, $646 billion in remittances were sent globally, according to the World Bank. In El Salvador, where remittances make up nearly a quarter of the nation's GDP, adopting Bitcoin as legal tender could save the country almost $1 billion a year in fees, boosting its GDP by 4%.

The Lightning Network, a second-layer solution for Bitcoin, enables instant, nearly free transactions. This can significantly benefit individuals sending money to their families, as they can avoid the high fees and long wait times associated with traditional money transmitters.

Beyond its utility as a means of payment and store of value, Bitcoin also has the potential to "replace the whole foundation" of traditional financial services. As Jack Dorsey, CEO of Twitter and Square, notes, basic transaction services such as ACH or credit card networks are outdated and losing relevance. Bitcoin, on the other hand, is a decentralized, open monetary system that is rules-based and verifiable by anyone.

Elon Musk, the founder of Tesla and SpaceX, also recognizes the potential of Bitcoin to improve the quality of information in the economy. He highlights that government interference in currency markets is a "source of error," and Bitcoin can provide a more reliable alternative.

Overall, Bitcoin's economic empowerment capabilities lie in its ability to protect wealth, provide access to global economic systems, reduce fees in the remittance industry, and offer a more reliable and decentralized foundation for financial services.

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