Author: Weilin, PANews

More and more large tech companies are beginning to focus on how to protect their assets through innovative Bitcoin investment financial strategies. Recently, the Washington think tank "National Center for Public Policy Research" submitted a shareholder proposal to Amazon, suggesting that it incorporate Bitcoin into its financial reserves to address inflation risks.

At the same time, Microsoft is facing a similar proposal and will vote on the possibility of Bitcoin investment at its annual shareholder meeting on December 10. Although Microsoft's board recommends that shareholders oppose this proposal, the discussions reflect the potential of cryptocurrency as an investment tool for large companies and the gradual acceptance of cryptocurrency in corporate financial management and investment strategies.

Think Tank Proposal: Amazon Should Establish a Bitcoin Financial Reserve to Hedge Against Inflation Risks

Recently, the Washington D.C.-based free-market think tank, the National Center for Public Policy Research, submitted a shareholder proposal to Amazon, suggesting that the company consider adopting a Bitcoin financial reserve strategy at the shareholder meeting in April 2025.

The proposal points out that with increasing inflationary pressures, especially the depreciation risks associated with dollar reserves, adopting Bitcoin (BTC) as a reserve asset can help Amazon effectively hedge against inflation risks, thereby protecting the long-term interests of shareholders.

The think tank cited current inflation data in the proposal. The Consumer Price Index (CPI), which measures inflation, currently shows an inflation rate of 4.95%, but the proposal emphasizes that the CPI often underestimates the actual currency depreciation situation, and the real inflation rate may be twice that of the CPI figure.

The letter states that this severely erodes the value of Amazon's $88 billion in cash and short-term cash equivalents. To protect shareholder asset value, Bitcoin (BTC) should be used to hedge this risk.

The National Center for Public Policy Research wrote in the letter: "As of December 6, 2024, the price of Bitcoin has increased by 131% year-on-year, outperforming corporate bonds by an average of 126%. Over the past five years, the price of Bitcoin has risen by 1246%, outperforming corporate bonds by an average of 1242%."

The proposal also mentions that MicroStrategy's stock, which holds Bitcoin, has outperformed Amazon's stock by 537% over the past year. Moreover, they are not the only company doing this. The adoption of Bitcoin by institutions and enterprises is becoming increasingly common: more publicly traded companies, such as Tesla and Block, have added Bitcoin to their balance sheets; Amazon's second and fourth largest institutional shareholders—Blackstone and Fidelity—respectively offer Bitcoin ETFs to their clients; and the U.S. government may establish a Bitcoin strategic reserve in 2025.

The think tank concluded by proposing that Amazon allocate at least 5% of its assets to Bitcoin to protect the value of its financial reserves.

MicroStrategy and its founder Michael Saylor have promoted the corporate Bitcoin financial reserve strategy, which is gradually gaining attention among companies and pension funds. According to MicroStrategy Tracker data, the company's Bitcoin holdings are currently valued at over $40 billion, yielding a profit of about $17 billion for MicroStrategy.

Microsoft is About to Vote on Whether to Invest in Bitcoin

Meanwhile, an important policy benefit is that the Financial Accounting Standards Board (FASB) will officially adopt fair value accounting for Bitcoin starting in the fiscal year beginning after December 15, 2024. Under current GAAP regulations, companies must assess the impairment of crypto assets annually and conduct more frequent assessments when events or circumstances indicate that the asset is more likely to be impaired. In other words, companies holding cryptocurrencies can only report declines in the value of their crypto assets and cannot report increases until they sell the crypto assets under the rules for intangible assets with indefinite lives. The FASB's cryptocurrency update aims to change this reporting method to improve the accuracy of corporate financial statements. The upgrade of accounting standards will promote the global adoption of Bitcoin as a reserve asset.

In addition to Amazon, Microsoft is also facing a similar shareholder proposal. Microsoft will vote on whether to "evaluate investment in Bitcoin" at its annual shareholder meeting on December 10. This proposal was also put forward by the conservative think tank National Center for Public Policy Research, but the board recommends that shareholders vote against this proposal, stating that it is "unnecessary" and that the company's management has "carefully considered" the relevant issues.

In a filing submitted to the U.S. Securities and Exchange Commission, Microsoft stated that its global finance team regularly evaluates various investment assets, including cryptocurrencies, for diversification and risk management. The team has previously considered Bitcoin, but "as noted in the proposal, volatility is a factor in assessing the application of cryptocurrency investment in the company's treasury… Microsoft has established strong and appropriate processes to manage and diversify its corporate treasury for the long-term benefit of shareholders, so this public assessment request is unnecessary."

Nevertheless, with the rise in Bitcoin prices and the proposal from Amazon's shareholders, the situation may change. Earlier this month, Michael Saylor made a 3-minute presentation to Microsoft's board, and according to the slides he presented on Bitcoin strategy, he suggested that Bitcoin is a core opportunity for the next wave of technological innovation and recommended that Microsoft adopt Bitcoin as a core corporate strategy. He believes that Bitcoin is "digital capital," and in the current approximately $90 trillion global asset market, Bitcoin's market value is expected to grow from the current $2 trillion to $280 trillion by 2045, surpassing traditional assets such as bonds and gold.

It is worth mentioning that if the proposal passes, Microsoft will become the largest publicly traded crypto investment company, surpassing MicroStrategy and Tesla, and its actions may have a demonstration effect on other large companies. However, according to prediction platform voting, investors currently believe that the probability of this proposal passing is low, at only 13%.

Amazon Once Purchased Crypto Domain Names, Rumored to Launch NFT Market, but Still Actively Exploring

Returning to Amazon, the e-commerce giant has had a complex relationship with cryptocurrency. As early as April 2014, Amazon decided not to accept Bitcoin (BTC), citing customer preferences. Interestingly, just a few months after this decision was announced, Amazon's competitor Overstock.com became the first large retail company to accept Bitcoin as a payment option and achieved initial success. Overstock's CEO Patrick Byrne at the time stated that Amazon would eventually have to "follow suit." However, despite the overall improvement in market capitalization and adoption, Amazon has continued to refuse to accept Bitcoin payments.

Nevertheless, Amazon has not completely "kept its distance" from cryptocurrency. In May 2014, shortly after announcing that it had no plans for cryptocurrency, Amazon obtained a patent related to Bitcoin, allowing the use of digital currency to pay for cloud computing services on Amazon Web Services (AWS). However, this patent was actually applied for in March 2012, where cryptocurrency was mentioned merely as a payment method.

In November 2017, reports emerged that Amazon had purchased several cryptocurrency-related domain names, including "amazoncryptocurrencies.com," "amazoncryptocurrency.com," and "amazonethereum.com." At that time, it was also noted that "amazonbitcoin.com" redirected to Amazon's original website.

Amazon also launched Amazon Coins, which is not a cryptocurrency but a digital currency introduced in 2013 for Kindle eBook owners. Although there was some public interest, the coin did not see widespread use.

In April 2018, Amazon won a patent for a subscription information system described as a "streaming data marketplace." The company claimed it could "identify (Bitcoin) transaction participants" for government and law enforcement agencies. This document was submitted in June 2014.

In 2019, the cloud service provider Amazon Web Services (AWS) launched Amazon Managed Blockchain. Amazon Managed Blockchain (AMB) is a fully managed service designed to help you build resilient Web3 applications on public and private blockchains.

To date, Amazon does not have an official NFT marketplace. However, rumors about Amazon potentially launching an NFT marketplace in April 2023 circulated in March 2023, but these rumors have not materialized.

Currently, more and more large companies are beginning to pay attention to how to use Bitcoin and other digital assets to hedge against currency depreciation risks. Especially the success story of MicroStrategy indicates that incorporating Bitcoin as part of financial reserves can lead to significant capital appreciation. The attitudes of large enterprises like Microsoft and Amazon may be key in determining whether this strategy is widely adopted.

The adoption of Bitcoin treasury strategies will not only depend on the maturity of technology and market changes but also require corporate management to have a profound understanding of risks and returns. Whether Bitcoin can become a stable, long-term store of value in future financial management and asset allocation will influence the decisions of more enterprises.

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