In the early 1990’s the World Wide Web was created. Who would have known that this would lead to Amazon, a company with a market cap of 1.76 trillion USD, that with a few clicks, can deliver products to your door the very next day.
This same revolution is coming to the monetary sector. For the first time in human history, individuals and companies have access to “sound money” and can verifiably transact directly via cryptographic proofs without the need for a trusted third party using a monetary system that is decentralised and not under central control.
The Bitcoin Playbook outlines the process by which an organisation can leverage crypto technologies into their business operating model. This forms part of a larger digital transformation that companies will have to partake in to maintain relevance in the evolving economic conditions of today.
In general, when running a company, the corporate strategy should be to:
-
Grow reveue and operating income
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Reduce your operating costs
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Grow the assets of the company and investment income
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Create and preserve shareholder value
The operating strategy can be divided into two parts, what we will term: a Balance Sheet Strategy, and a Profit & Loss (P&L) strategy. Example activities under both these strategies are outlined in the table below:
| Balance Sheet Strategy | P&L Strategy |
|---|---|
Convert fiat treasury to Bitcoin |
Mine Bitcoin |
Issue equity and buy Bitcoin |
Buy into Bitcoin ETFs |
Accept Bitcoin as a form of payment |
|
Allow employees to be paid in Bitcoin |
On August 11th 2020, MicroStrategy was the first publicly traded company to use Bitcoin as a treasury asset. Additional operating companies followed this pioneer and we count now over 30 listed companies that have invested cash to over 200,000 bitcoins.
| Entity | Country | Exchange Symbol | # of BTC | Value | % of 21m |
|---|---|---|---|---|---|
MicroStrategy |
MSTR:NADQ |
Filing / News |
92,079 |
$3,125,525,423 |
0.438% |
Tesla, Inc |
TSLA:NADQ |
Filing / News |
42,902 |
$1,456,263,553 |
0.204% |
Galaxy Digital Holdings |
BRPHF:OTCMKTS |
Filing / News |
16,400 |
$783,342,574 |
0.078% |
Voyager Digital LTD |
VYGR:CSE |
Filing / News |
12,260 |
$585,596,339 |
0.058% |
Square Inc. |
SQ:NYSE |
Filing / News |
8,027 |
$383,407,978 |
0.038% |
Marathon Digital Holdings Inc |
MARA:NADQ |
Filing / News |
6,695 |
$319,785,276 |
0.032% |
Coinbase Global, Inc. |
COIN:NADQ |
Filing / News |
4,482 |
$214,081,794 |
0.021% |
Hut 8 Mining Corp |
HUT:NASDAQ |
Filing / News |
4,240 |
$202,522,714 |
0.02% |
Bitcoin Group SE |
BTGGF:TCMKTS |
Filing / News |
3,947 |
$188,527,630 |
0.019% |
Riot Blockchain, Inc. |
RIOT:NADQ |
Filing / News |
2,687 |
$128,343,994 |
0.013% |
Bitfarms Limited |
BITF:NASDAQ |
Filing / News |
2.028 |
$96,866,996 |
0.01% |
NEXON Co. Ltd |
NEXOF:OTCMKTS |
Filing / News |
1,717 |
$82,012,146 |
0.008% |
Argo Blockchain PLC |
ARBKF:OTCMKTS |
Filing / News |
1,268 |
$60,565,755 |
0.006% |
Brooker Group’s BROOK (BKK) |
BROOK:BKK |
Filing / News |
1,150 |
$54,929,510 |
0.005% |
Hive Blockchain |
HVBT:NASDAQ |
Filing / News |
946 |
$45,185,492 |
0.005% |
Meitu |
HKD:HKG |
Filing / News |
941 |
$44,946,668 |
0.004% |
Bit Digital, Inc. |
BTBT:NASDAQ |
Filing / News |
588 |
$28,085,697 |
0.003% |
BIGG Digital Assets Inc. |
BBKCF:OTCMKTS |
Filing / News |
430 |
$20,538,860 |
0.002% |
Digihost Technology Inc. |
HSSHF:OTCMKTS |
Filing / News |
402 |
$19,201,446 |
0.002% |
Cypherpunk Holdings Inc. |
HODL:OTCMKTS |
Filing / News |
386 |
$18,437,209 |
0.002% |
CleanSpark Inc |
CLSK:NASDAQ |
Filing / News |
301 |
$14,377,202 |
0.001% |
Advanced Bitcoin Technologies AG |
ABT:DUS |
Filing / News |
254 |
$12,132,257 |
0.001% |
DMG Blockchain Solutions Inc. |
DMGGF:OTCMKTS |
Filing / News |
250 |
$11,941,198 |
0.001% |
DigitalX |
DGGXF:OTCMKTS |
Filing / News |
216 |
$10,317,195 |
0.001% |
MercadoLibre, Inc. |
MELI:NADQ |
Filing / News |
150 |
$7,164,719 |
0.001% |
Fortress Blockchain |
FORT:CVE |
Filing / News |
140 |
$6,687,071 |
0.001% |
Banxa Holdings Inc |
NXAF:OTCMKTS |
Filing / News |
136 |
$6,496,012 |
0.001% |
Neptune Digital Assets |
NPPTF:OTCMKTS |
Filing / News |
105 |
$5,015,303 |
0.001% |
BTCS Inc. |
BTCS:OTCMKTS |
Filing / News |
90 |
$4,298,831 |
0.0% |
FRMO Corp. |
FRMO:OTCMKTS |
Filing / News |
63 |
$3,009,182 |
0.0% |
LQwD FinTech Corp |
OTC:INLAF |
Filing / News |
60 |
$2,865,887 |
0.0% |
Metromile |
MILE:NASDAQ |
Filing / News |
25 |
$1,194,120 |
0.0% |
Phunware, Inc. |
PHUN:NASDAQ |
Filing / News |
25.8 |
$1,194,120 |
0.0% |
MOGO Financing |
MOGO:Nasdaq |
Filing / News |
18 |
$859,766 |
0.0% |
Net Holding Anonim Sirketi |
NTHOL TI:IST |
Filing / News |
3 |
$143,294 |
0.0% |
Totals: |
227,374 |
$10,860,471,612 |
1.083% |
As said Michael Saylor, Bitcoin can:“provide the opportunity for better returns and preserve the value of our capital over time compared to holding cash.” [1]
There are a variety of additional reasons why a company would add crypto-assets on its balance sheet:
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Using crypto-assets as an hedge against inflation, thanks to the inverted correlation of this asset class with fiat currencies depreciation
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Using crypto-assets as an asymmetric risk return (trading)
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Using crypto-assets for portfolio diversification as this new asset class improves the shape ratio
-
Using crypto-assets for long term investment (store of value) similar to gold
Having said that, we shouldn’t underestimate the numerous inherent risks. We will cover later in this document the key controls (COSO) that corporate/treasury departments should put in place before investing in Bitcoin and other crypto currencies.