Why more and more companies are buying bitcoin
A growing list of firms have turned themselves into bitcoin holding companies recently, incorporating the top crypto in their balance sheets along with more traditional assets like cash and bonds.
To date, 80 companies have embraced the "bitcoin standard," and they own about 3.4% of the total bitcoin supply, according to a report from Bernstein Research.
Many are trying to replicate the success of Strategy, which pioneered the bitcoin treasury strategy and has amassed a trove of around 554,000 bitcoins. The company's stock has outperformed the Magnificent Seven, S&P 500, and its underlying bitcoin holdings in the last 12 months.
Following suit, last month, GameStop added $500 million of bitcoin to its balance sheet in its first-ever crypto purchase, and Trump Media & Technology Group announced plans to raise $2.5 billion for a bitcoin treasury.
In April, the SPAC Cantor Equity Partners merged crypto firm Twenty One Capital with the goal of becoming a pure-play bitcoin holding company and saw its shares spike nearly 500% in the first week of trading.
Bernstein predicts that company demand could drive $330 billion of inflows into bitcoin by 2029, with up to $124 billion of that from Strategy alone. That influx of corporate money would be bullish for bitcoin's price.
However, buying bitcoin isn't a one-size-fits-all maneuver, and Strategy's success may be hard to replicate, Bernstein said.
Small, low-growth companies are good candidates
Bernstein estimates that around 2,000 global companies with market caps under $100 billion could be prime candidates for bitcoin adoption. These firms share characteristics like low growth (defined as sub-5% yearly revenue growth rate), low leverage, and high cash piles of $100 million or more.
Bitcoin could be a lifeline for these types of companies. Firms with poor growth prospects might decide that their cash is better spent on investing in bitcoin than letting it sit on their balance sheet earning minimal returns.
A prime example is Japanese hotel-management company turned bitcoin treasury, MetaPlanet. After years of weak profitability and stock-price stagnation, MetaPlanet began purchasing bitcoin in 2024 via cash raised from bond and equity sales. The move paid off, and the stock is up over 500% in the last year.
Some larger companies, such as Tesla, have also purchased bitcoin in the past. However, other mega-cap companies have rejected proposals to buy bitcoin. Meta is the latest example, with over 99% of shareholders voting against a bitcoin treasury plan earlier this week. Proposals have also failed at Amazon and Microsoft.
Can Strategy's strategy be replicated?
Not all businesses will find the same success as Strategy. The business software company has been piling up bitcoin for five years, enticing investors with equity, convertible debt, and preferred stock offerings to fund even more purchases.
The stock provides investors with price appreciation, convertible debt offers more capped upside, and preferred stock provides dividend payouts. The company also has the benefit of experience after weathering multiple bitcoin price crashes.
MetaPlanet and other treasury companies have issued convertible debt and equity, but Bernstein points out these companies don't have the same scale and ability to raise funds as Strategy.
However, as bitcoin popularity skyrockets, it's clear that lack of experience won't stop these companies from taking a page from the Strategy playbook.
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