Blog Post

What Companies Own Bitcoin?

What Companies Own Bitcoin?
Photo by AaronJOlson from Pixabay

Ever since the American technology firm Microstrategy bought $425 million worth of Bitcoin, there has been a growing trend amongst other companies to own Bitcoin.

The idea of corporations buying large quantities of this digital currency and listing them on their balance sheets would have sounded ridiculous a few years ago. However, all that has suddenly changed. With Microstrategy leading the way, buying this cryptocurrency now appears to be a growing trend amongst institutional giants. Some finance experts worry that the volatility in Bitcoin’s prices could ruin these companies’ balance sheets.

But why do companies own Bitcoin?

Why Would A Company Buy Bitcoin?

Why Would A Company Buy Bitcoin?
Photo by Olga Neptuna from Pexels

According to the CEO of Microstrategy, the move to hold Bitcoin is a means to an end — hedging against fiat inflation. Many companies believe that it is an asset that could stay liquid and generate returns simultaneously. Others have found this digital currency to be an asset that is capable of boosting their treasuries.

Based on recent happenings, it is becoming evident that many mainstream companies have bought into the Bitcoin craze. Whether it is the fear of missing out or the drive to grow their assets, purchasing this digital currency in large quantities is becoming common for many companies.

Tesla, for instance, purchased $1.5 billion worth of Bitcoin earlier this year and planned to allow customers to buy Tesla cars with the crypto. However, this plan was scrapped with Elon Musk’s clean energy concerns, only to be reversed later.

Bitcoin’s ability to serve multiple purposes cannot be ruled out as a motivation for these companies. It can act as a medium of exchange, store of value, hedge against inflation, etc. This could be why the Bitcoin topic is a significant consideration in several corporate boardrooms.

Companies with Bitcoin on their Balance Sheets

Companies With Bitcoin On Their Balance Sheets
Photo by kevin92 from Pixabay

Many major firms, including Microstrategy, Tesla, Square, and Coinbase, have collectively purchased hundreds of millions of dollars worth of Bitcoin.

This section will look at the most prominent companies that hold this digital currency on their balance sheets.

Public Companies that Own Bitcoin

COMPANY

AMOUNT OF BITCOIN

% OF 21 MILLION

MicroStrategy                        

105,085

0.5%

Tesla, Inc                   

42,902

0.204%

Galaxy Digital Holdings

16,400

0.078%

Voyager Digital LTD                                  

 

12,260

0.058%

Square Inc.                

8,027

0.038%

Marathon Digital Holdings Inc

5,784

0.028%

Coinbase Global, Inc.            

4,482

0.021%

Hut 8 Mining Corp                 

4,123

0.02%

Bitcoin Group SE                   

3,947

0.019%

Riot Blockchain, Inc.              

2,243

0.011%

NEXON Co. Ltd                     

1,717

0.008%

Bitfarms Limited                     

1,445

0.007%

Argo Blockchain PLC            

1,108

0.005%

Hive Blockchain                     

1,033

0.005%

Bit Digital, Inc.                       

1,000

0.005%

Meitu              

941

0.004%

BIGG Digital Assets Inc.        

788

0.004%

Cypherpunk Holdings Inc.     

360

0.002%

Private Companies that Own Bitcoin

COMPANY

AMOUNT OF BITCOIN

% OF 21 MILLION

Block.one

140,000

0.667%

The Tezos Foundation

17,500

0.083%

Stone Ridge Holdings Group

10,000

0.048%

Massachusetts Mutual

3,500

0.017%

Lisk Foundation

1,898

0.009%

Seetee AS

1,170

0.006%

How is Bitcoin Accounted for on a Balance Sheet?

The rules for crypto taxation and accounting depend on the jurisdiction of the companies with Bitcoin on their balance sheets. For instance, the guidance from 2019 issued by the U.S. accounting trade body allows U.S. companies to account for Bitcoin under regulations for “intangible assets” such as intellectual property.

To account for Bitcoin on a balance sheet, companies must record the value of the digital currency at the time of purchase. If the price rises, they cannot log those gains until they sell. Yet if the value drops, the company must write down the value of their holdings as an impairment charge.

However, outside of the U.S., companies operate under a separate set of rules. Generally, companies that own digital coins for sale as part of their regular business hold them as inventories at cost price. But other companies, such as broker-traders, can maintain them at the market value.

Is Bitcoin an Asset?

Is Bitcoin An Asset?
Photo by geralt from Pixabay

With the growing interest in Bitcoin by corporate entities, ordinary people are starting to wonder if this crypto is indeed an asset. As expected, Bitcoin enthusiasts and critics clearly disagree on this subject. There is no correct answer; it all depends on which side of the fence you sit.

Most digital currencies are generally regarded as indefinite-lived intangible assets, except in a few specific situations where they are held as investments by investment companies. Intangible assets are assets that do not have a physical substance. Based on its design, Bitcoin meets this exact specification.

Why Companies Own Bitcoin: Summary

More companies buying into the crypto craze could create scarcity and cause price surges. However, there are downsides to this trend. With higher Bitcoin purchasing power resting on the shoulders of these companies, it will be easy for them to manipulate the market.

Bitcoin minimalists have often talked about the hyperbitcoinized world. A world where Bitcoin becomes widely accepted while fiat is the inferior form of money. This may be a dream come true for enthusiasts, but some experts say it could lead to “old problems.”

They suggest that this world will create wealth inequalities since only a tiny minority that owns this digital currency will control all the wealth. These upper echelons of society will be those who have already invested in this digital asset. The argument is that most people today don’t own Bitcoin. With the arrival of the hyperbitcoinized world, there will be an even more significant gap between the rich and poor.

Could this be the reason why so many companies are buying up this cryptocurrency?

Could the hypothetical hyperbitcoinized world become a reality?

Only time will tell.

This blog is for informational purposes only.
This does not imply or suggest investment in cryptocurrencies.

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