- Amazon shareholders propose including Bitcoin in the company’s balance sheet as a reserve asset
- The proposal aims to leverage Bitcoin’s growth potential and enhance the company’s financial flexibility.
What happened: Amazon’s Bitcoin treasury proposal
A group of Amazon shareholders has urged the company to diversify its treasury holdings by allocating at least 5% of its assets to Bitcoin. In a shareholder proposal dated December 6, The National Center for Public Policy Research asked Amazon to consider holding at least 5% of its assets in Bitcoin.
The proposal argued that Bitcoin could protect Amazon’s $88 billion in cash and short-term assets from inflation. The group raised concerns about the Consumer Price Index (CPI), often used to measure inflation, arguing that it underestimates actual inflation rates, which could be twice as high. With cash losing value and bond yields falling short of actual inflation, the proposal suggests that Bitcoin offers a more resilient alternative.
Bitcoin’s performance further strengthens the case. Over the past year, Bitcoin has risen by 131%, significantly outperforming corporate bonds by an average of 126%. While Bitcoin is known for its volatility, the proposal noted that Amazon’s stock has also experienced fluctuations throughout its history. Yet, this volatility has not deterred Amazon from maximizing shareholder value in the long term.
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What it’s important
The proposal to include Bitcoin in Amazon’s treasury is a significant signal of the growing intersection between traditional corporate finance and digital assets. While Amazon’s potential move could pave the way for other major corporations to follow suit, the decision also raises important questions about financial risk and long-term strategy. Many companies, including the likes of MicroStrategy, have already taken the plunge into Bitcoin. MicroStrategy, for example, has accumulated over 120,000 Bitcoins, positioning itself as one of the largest corporate holders of the cryptocurrency. This move has drawn both admiration and skepticism, with some investors praising the company’s foresight while others worry about Bitcoin’s price volatility impacting the firm’s financial stability.
For smaller companies, the idea of adopting Bitcoin could be even more contentious. Startups like BlockFi and Bitwise have embraced Bitcoin not just as an investment, but as part of their core business model, providing cryptocurrency-related services. However, the volatility of Bitcoin has led to significant challenges. In 2022, BlockFi was forced into bankruptcy following the collapse of crypto-exchanges like FTX, highlighting the risks of over-exposure to digital currencies in a rapidly changing market.
