According to a document filed by Microsoft (MSFT) with the U.S. Securities and Exchange Commission (SEC) on October 24, an unexpected item was included in the agenda for its annual shareholders meeting scheduled for December 10.
Along with routine votes on things like election of directors, ratification by independent auditors, and reporting on AI misinformation, one proposal stood out: a “Bitcoin Investment Assessment.” Interestingly, Microsoft’s board recommended shareholders vote no.
Microsoft’s Cash Position and Potential Bitcoin Price Impact
As of its Q2 2024 financial report, Microsoft has $76 billion in cash and equivalent assets. If shareholders pressured the company to allocate even 10% of that to Bitcoin, it would be a massive $7.6 billion investment.
Best bitcoin holder. Source: River
At an average price of $73,000 per Bitcoin, this is equivalent to 104,109 BTC. This is almost 11 times the amount Tesla currently holds, which is 9,720 BTC. While this number is significant, it lags behind MicroStrategy’s aggressive accumulation strategy, leaving it with 252,220 BTC.
However, as Bitcoin supply has dwindled, more than 80% of all BTC has not moved in more than six months, and BTC balances on exchanges have fallen to their lowest level in four years. A Microsoft acquisition of this scale comes as a shock.
Whether this becomes a reality will depend on how shareholders vote in December, but even the possibility has already created ripples in both the corporate and cryptocurrency world.
How U.S. Shareholder Voting Works
In U.S. listed companies such as Microsoft, shareholders vote on important decisions at annual meetings. Votes on special proposals, such as Bitcoin investments, are generally non-binding, but serve as a gauge of shareholder sentiment and, if sufficient support is gained, can pressure the company to act accordingly.
Majority shareholders can force the company to consult with all shareholders on certain issues, according to SEC rules for public companies. However, the board recommended a vote against the Bitcoin proposal, reflecting caution over volatility and regulatory uncertainty. Nonetheless, the growing demand for Bitcoin from institutional investors cannot be ignored.
relevant: Amid BTC’s V-shaped rebound, Bitcoin whale accumulation reached an all-time high of 670K.
Reid Hoffman, LinkedIn founder and Microsoft board member, expressed favorable views on Bitcoin in an interview with Yahoo Finance. Hoffman called Bitcoin a digital store of value and emphasized its role in reshaping the future of the financial system. Hoffman is known to be an early investor in Xapo, a major Bitcoin storage service provider.
If Microsoft decides to invest in Bitcoin, there are several ways it could do so. The company could purchase Bitcoin directly from regular exchanges, similar to how Tesla acquired its stake.
Another option is to purchase shares of a Bitcoin spot ETF. This provides indirect exposure and avoids the direct custody risks associated with holding physical assets with the added liquidity and regulatory clarity. This structure can also improve capital efficiency by making it easier to buy and sell.
Microsoft may also consider the use of leverage, including the use of derivatives such as call options, to strategically increase market exposure without deploying large initial capital. This allows you to speculate on price movements, potentially amplifying your profits. However, the leveraged nature of such positions introduces additional risk.
Ultimately, Microsoft is unlikely to invest in Bitcoin anytime soon, but pressure from shareholders will highlight Bitcoin’s appeal, potentially encouraging other companies to explore it.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.