30s Summary

Microsoft has proposed a potential investment in Bitcoin at its upcoming annual meeting, a move which the company’s board has advised shareholders to vote against. Despite this warning, prominent investors’ interest in Bitcoin continues to grow. Microsoft, reported to have around $76 billion in ready cash, could make a considerable investment in Bitcoin, stirring the market during the current cryptocurrency supply shortage. However, the company’s decision to invest and the precise method of investment, whether direct purchase, share buying or using derivatives, is yet to be seen.

Full Article

Microsoft recently filed a document with the United States Securities and Exchange Commission (SEC) that included an unexpected line item for the company’s upcoming annual meeting on December 10th. The surprise? A proposal about investing in Bitcoin. What’s fascinating about this is that Microsoft’s board has suggested shareholders vote against the proposal.

As things stand, according to their Q2 2024 report, Microsoft has around $76 billion in ready cash. If the company was to invest even just 10% of that into Bitcoin, that would be a whopping $7.6 billion. Now, to put that in perspective, Microsoft investing in Bitcoin at an average price of $73,000 each would mean the company would own around 104,109 BTC. That’s nearly eleven times the amount Tesla is currently sitting on but still far behind MicroStrategy’s holdings.

Looking at the bigger picture, Microsoft buying this much Bitcoin would create quite a stir considering there’s a bit of a supply shortage with Bitcoin at the moment. Over 80% of all BTC has remained still for more than six months, and there isn’t a lot of it on exchanges anymore. While it remains uncertain if Microsoft would really pursue this route, even the slight possibility has caused waves in the corporate and crypto world.

In case you’re wondering how all this works, in the US, a company like Microsoft allows its shareholders to vote on important stuff at annual meetings. Votes on proposals, like this Bitcoin one, don’t usually bind the company to act but give them a sense of what shareholders are thinking and feeling. And sometimes, if there’s enough support, they can put pressure on the company to act a certain way. Despite the Microsoft board’s advice to vote against it, interest in Bitcoin from big-time investors continues to grow.

Reid Hoffman, the founder of LinkedIn and a Microsoft board member, has shown his support for Bitcoin during a chat with Yahoo Finance. While he won’t be the one to make the final call, if Microsoft did decide to take the plunge into the world of Bitcoin, they likely have a few options. They could buy Bitcoin directly on exchanges, like Tesla did, or they could buy shares of a Bitcoin spot ETF, meaning they’d indirectly hold Bitcoin without having to physically store it.

Another possible move for Microsoft could be using derivatives to play the market without putting too much money down. This could ramp up their returns, but it also brings along more risk because of the added leverage. In conclusion, while a Bitcoin investment might not be in the pipeline for Microsoft just yet, the fact that shareholders are even considering it shows how attractive Bitcoin has become. This could also encourage other companies to look into it.

Source: Cointelegraph