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Around 6% of Bitcoin’s circulating supply has been accumulated by asset managers and companies, signaling ever increasing mainstream and institutional adoption of crypto assets.
According to Buy Bitcoin Worldwide, 816,379 BTC worth $40.1 billion is currently held by 14 Bitcoin fund issuers and asset managers — representing 4% of the cryptocurrency’s supply.
Industry leader, the Grayscale Bitcoin Trust, represents more than 3% of the Bitcoin supply, managing 654,600 BTC (worth $32 billion). CoinShares’ XBT Provider ranks second with 48,466 BTC ($2.4 billion) representing 0.23% of supply. The 12 remaining issuers represent 113,313 BTC or 0.54% of thesupply combined.
The data provider also tracks 34 public companies that hold BTC on their balance sheets, which collectively command 1% of Bitcoin’s supply.
Half of all Bitcoin held by public companies is in the possession of MicroStrategy, which after adding 3,907 Bitcoin to its stash since the start of July, now holds 108,992 BTC worth $5.3 billion.
Electric vehicle manufacturer Tesla accounts for 20% of the Bitcoin held by private companies, with the firm having accumulated 42,902 BTC worth nearly $2.1 billion.
Private companies have absorbed another 174,068 BTC worth $8.5 million, cornering 0.83% of Bitcoin’s supply. Roughly 80% of BTC stashed away by private companies is held by Block.One — with the firm currently sitting on 140,000 BTC worth $6.8 billion.
Estimates vary among data providers however, with Bitcoin Treasuries tallying 1.4 million BTC on the balance sheets asset manager and companies. A further 260,000 BTC are attributed to the balance sheets of national governments.
Bitcoin’s supply will cap at 21 million BTC, with analysts estimating the final Bitcoin will be mined in the year 2140. At the time of writing, roughly 18.8 million BTC are in circulation. However access to one fifth of all Bitcoin (or more) is believed to have been lost, meaning that asset managers and companies may control an even greater share of the supply.
Related: Bitcoin hashrate triples since June 28 in recovery from China syndrome
While large entities are gobbling up BTC, Ethereum has appeared to have been undergoing a supply shock of its own in the wake of its London upgrades that introduced a burn mechanism to the crypto asset’s fee market.
According to Watch The Burn, 97,369 Ether worth $313.5 million has been destroyed in the 21 days since London, meaning that roughly 4,637 ETH are being burned daily on average. Overall, Ethereum’s burn mechanism has resulted in 35% a net reduction in the number of newly minted Ether entering supply.
MicroStrategy, which holds more than 92,000 bitcoin, laid the groundwork for a potential $1 billion stock sale in order to buy more BTC.
MicroStrategy, the software intelligence firm that has acquired more than 92,000 BTC under CEO Michael Saylor, is considering offering up to $1 billion of stock to buy more bitcoin, immediately following a successful $500 million bond sale for the same purpose.
According to a prospectus filed with the U.S. Securities and Exchange Commission (SEC), MicroStrategy has entered into an agreement with investment banking company Jefferies Group to potentially offer up to $1 billion in its class A common stock and “use the net proceeds from this offering for general corporate purposes, including the acquisition of bitcoin.”
While this prospectus did not indicate any firm bitcoin acquisition plans or promise that MicroStrategy would flip as much as $1 billion into BTC, it is remarkable that it laid this groundwork on the same day that the firm announced its sale of $500 million of senior secured notes due 2028 to “acquire additional bitcoin.”
Since pursuing an aggressive bitcoin accumulation strategy in August 2020, MicroStrategy has seen its revenues surge, despite fluctuations in bitcoin’s price. It boosted its latest note offering from $400 million to $500 million after reportedly receiving $1.6 billion in orders.
According to bitcointreasuries.org, MicroStrategy has by far the most BTC of any public company in the world. It has more than twice as much as Elon Musk’s electric vehicle company Tesla, which holds about 43,000 BTC.
As interest in bitcoin grows and more platforms roll out that make it simpler to acquire, secure and leverage, demand for compensation in BTC is on the rise as well. Documenting this rise in real time, Coinkite CEO Rodolfo Novak (aka @NVK) has launched paysbitcoin.org, a webpage tracking the major companies that offer compensation in bitcoin.
The resource is hosted as part of Novak’s other popular adoption tracking product, bitcointreasuries.org, which lists the major companies that have allocated part of their treasuries to BTC.
“I always assumed that there was a place where you could see, not a complete list, but some list of large holders of bitcoin that are not private entities,” Novak told Bitcoin Magazine in October 2020. “But I couldn’t find anything and I’m a lover of buying domains, so I just started putting [bitcointreasuries.org] together in the hopes it would create more FOMO for other companies.”
The same rationale seems to have guided the launch of paysbitcoin.org. On April 5, when Castle Island Ventures’ Nic Carter took to Twitter to suggest a version of bitcointreasuries.org that listed the companies that offer bitcoin compensation, Novak responded that he would spin it up and seek the data needed to populate it.
As of this writing, the website lists 25 companies, along with their headquarters locations, geographic hiring pools and more. As more companies around the world realize employee demand for compensation in a programmatically-sound, digitally-native, borderless form of money, this domain will be one to keep your eyes on.
What started out as a slow trickle of institutional investment pouring into the bitcoin market is developing into a steady stream that will, in time, turn into an all out flood. Let the game theory commence!
Prior to 2020, institutional and corporate interest in bitcoin was rather inconsequential. Though it started as a grassroots phenomenon, led mostly by “retail” for the first 11 years of its history, the rubicon was definitely crossed for bitcoin in 2020 with the COVID-19 pandemic and subsequent economic recession brought about record levels of monetary expansion globally. As a result, institutional and corporate interest in bitcoin as a monetary asset has exploded. While investors like Paul Tudor Jones, Stanley Druckenmiller and others have come out as bullish on bitcoin, publicly-traded companies that have turned to BTC will be the focus of this article.
On August 11, 2020, Michael Saylor, CEO of MicroStrategy, fired a shot heard across the Bitcoin industry and the legacy financial system. He announced that his company had shifted its treasury reserve strategy to a Bitcoin standard (you can find the original press release here).
“We just had the awful realization that we were sitting on top of a $500 million ice cube that’s melting. This is not a speculation, nor is it a hedge” said Saylor. “This was a deliberate corporate strategy to adopt a bitcoin standard.”
Following the move in August, Saylor spent the following months seemingly taking up nearly every interview and podcast invite that was thrown his way to describe his company’s decision. In January 2021, Saylor announced that MicroStrategy was conducting an online seminar open for all to attend, “Bitcoin for Corporations,” during which his team open-sourced its thesis and playbook so that other corporations could follow in its footsteps.
The result: An explosion in the price and interest in bitcoin as a treasury reserve asset. Bitcoin opened 2021 at a price of $29,150, and, at the time of this writing, it is trading at $47,900.
Here are the other institutional bitcoin adoption highlights from February:
February 8: Tesla, Inc. (TSLA) Purchases $1.5 Billion Of BTC (Official BTC Amount Remains Undisclosed).
“In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, we may invest a portion of such cash in certain specified alternative reserve assets. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy.”
-Tesla’s Form 10-K Filing
This move by Tesla and CEO Elon Musk was massive for the acceptance of bitcoin as a hedge against fiat debasement, and indirectly gave every S&P 500 investor partial bitcoin exposure — a mark in the sand for bitcoin in public markets with an endorsement by the world’s largest automaker by market cap, led by (at the time) the world’s richest man.
February 19: MicroStrategy Completes $1.05 Billion Offering Of Convertible Notes At 0 Percent Interest, With Plans To Acquire More BTC As Per The Company’s Treasury Reserve Policy.
Saylor continued to show his cards to the rest of the world by executing another speculative attack on the dollar at 0 percent interest.
February 23: Square (SQ) Purchases 3,318 BTC For $170 Million Of Bitcoin, Putting Its Stack At A Total Of 8,027 BTC.
Outspoken Bitcoin proponent and Square CEO Jack Dorsey doubled down on his BTC bet, upping Square’s stake to about 5 percent of its liquid cash.
February 24: MicroStrategy Purchases 19,452 BTC For $1.026 Billion In Cash At An Average Price Of $52,765 Per BTC.
For an updated record of Bitcoin on corporate balance sheets, visit https://bitcointreasuries.org.
Elon Musk’s multi-billion dollar company, Tesla, has purchased an aggregate $1.5 billion of BTC and will begin to accept the cryptocurrency as payment, per a financial performance report filing with the U.S. Securities and Exchange Commission for the fiscal year ended on December 31, 2020.
Per the filing, in January 2021 the company updated its investment policy to “provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.” This update was officially approved by Tesla’s audit committee of its board of directors, and then the buying had begun.
Also according to the filing, Tesla will begin accepting bitcoin as a form of payment for its goods and services in the future, though it “may or may not liquidate upon receipt.” As many see bitcoin as a long-standing store of value, including an increasing wave of corporations, it would make sense for the company to hold onto the BTC instead of selling it for fiat. The filing indicated that Tesla does ““intend to hold these assets long-term.”
It’s likely that Tesla’s acceptance of bitcoin will garner additional sales, as many within the Bitcoin community are fond of the company. The price of BTC surged last month when Musk changed his Twitter profile to “#bitcoin.” And Bitcoiners were further engaged when he took to Clubhouse to explicitly endorse Bitcoin shortly thereafter.
Tesla’s filing became public less than a week after MicroStrategy held its “Bitcoin For Corporations” conference. Many institutions have followed the software intelligence company and its CEO Michael Saylor in diverting their treasury assets into bitcoin, with MicroStrategy buying 0.1 percent of the total bitcoin supply last summer. The conference was an effort to demonstrate the playbook for how and why holding bitcoin on a corporate balance sheet makes sense.
As companies adopt Bitcoin, they will begin to gain new levels of leverage over the state and amplify their ability to do commerce globally.
The post The Sovereign Company Thesis appeared first on Bitcoin Magazine.