YEREVAN (CoinChapter.com) — On Oct. 24, a filing by Microsoft Corp. (MSFT) with the SEC included a notable agenda item for the upcoming annual shareholder meeting on Dec. 10. Besides the routine agenda, one proposal stood out: an “Assessment of Investment in Bitcoin.” Microsoft’s board has advised against this proposal, possibly due to the volatility and regulatory concerns surrounding Bitcoin. Nonetheless, the inclusion of a Bitcoin investment assessment highlights growing interest among shareholders and corporations alike.
Microsoft’s Cash Holdings and Bitcoin’s Potential Price Effect
Microsoft’s Q2 2024 report shows a $76 billion cash reserve. If shareholders vote to allocate just 10% of this amount to Bitcoin, it would result in a $7.6 billion purchase. If Microsoft were to make a hypothetical investment of $7.6 billion with an assumed average Bitcoin price of $73,000, this investment could secure around 104,109 BTC. This is nearly eleven times Tesla’s current holdings of 9,720 BTC, though still less than MicroStrategy’s total of 252,220 BTC. This would significantly boost Microsoft’s position among top Bitcoin holders.
With over 80% of Bitcoin supply untouched for more than six months and Bitcoin balances on exchanges at a four-year low, a Microsoft purchase of this magnitude could create a notable impact. If approved, Microsoft’s entry could lead to a supply constraint in the market. The December vote will determine whether this scenario unfolds, but the proposal has already attracted significant interest in both corporate and crypto circles.
How Shareholder Votes Affect Company Policies
In the U.S., shareholder votes serve as important indicators for corporate policy changes. Proposals like Microsoft’s Bitcoin assessment may be non-binding but reflect shareholder sentiment. Large stakeholders can initiate such proposals, which require all shareholders’ opinions, following SEC regulations for public companies. Although the board recommended against the Bitcoin proposal, rising interest from institutional investors continues to shape discussions around Bitcoin as a corporate asset.
Notably, Reid Hoffman, LinkedIn’s founder and a Microsoft board member, recently shared favorable views on Bitcoin. In an interview with Yahoo Finance, he described Bitcoin as a “digital store of value” and discussed its potential to transform financial systems. Hoffman has long been involved in Bitcoin through his early investment in Xapo, a digital custody provider.
Options for Microsoft to Consider if Investing in Bitcoin
If Microsoft proceeds with Bitcoin investment, various strategies could be considered. Direct Bitcoin purchases on exchanges offer one approach, as Tesla did for its holdings. Alternatively, Microsoft might invest in a Bitcoin spot ETF, offering indirect exposure with added liquidity and regulatory clarity, eliminating the need for physical Bitcoin custody.
Another method involves using leveraged options, such as call options, to amplify Bitcoin exposure without significant capital investment upfront. However, this strategy brings increased risk due to potential price swings associated with leveraged positions.
If shareholders lean toward Bitcoin, the vote might influence other companies to consider Bitcoin as a potential asset.
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