Businesses With Bitcoin on Their Balance Sheets Suffer a Near-$7 Billion Loss
Companies using bitcoin on their balance sheets have incurred significant losses after the crisis. These corporations who have steadily added BTC to their holdings have generated a profit into the billions while the price of the cryptocurrency was skyrocketing. However, since the decline that led bitcoin to lose nearly 50 percent of its value, they have now had billions chopped off their balance sheets combined.
Publicly traded firms have cautiously but gradually built their bitcoin holdings over time. By August 2021, it was stated that institutional investors had approximately 10 per cent of the entire BTC supply. Given that the supply of BTC is limited, this volume is considerable, particularly since institutional admission into the market is still in its infancy.
As the price of BTC had increased, so has the worth of the BTC the corporations owned. At some time attaining nearly as high as 100 percent returns for some and beyond that for others. But as with any market, an upswing cannot stay forever and with the crisis that shook the market late last year, institutional investors are seeing the value of their holdings diminish.
From November 2021 to January 2022, publicly listed corporations using bitcoin on their balance sheets have lost roughly $7 billion from their BTC holdings. Much of this lost value was documented by the biggest companies in the industry, MicroStrategy, Tesla, Galaxy Digital, and Block.
The decrease in value has not disturbed any of the companies’ conviction in the digital asset, though. Most are dedicated to owning bitcoin for the long-term while others like MicroStrategy have indicated that they will continue to acquire BTC moving ahead.
Several of the firms that have bitcoin on their balance sheets are well-known. Others are much less well-known but yet maintain considerable bitcoin holdings on their balance sheets. Among these are publicly listed firms such as MicroStrategy, Tesla, Galaxy Digital, and Jack Dorsey’s Block (previously Square).
Over time, these organisations have developed a more favourable view of BTC, deciding to invest in the digital asset over others, like MicroStrategy did. These businesses, however, have one thing in common: they are led by bitcoin maximalists.
MicroStrategy, the publicly listed business with the world’s highest BTC holdings, is led by Michael Saylor, a well-known bull of Bitcoin. Saylor has said that he personally owned BTC, far before his firm did, citing his own gains as proof that the digital currency was a solid investment.
Tesla is the public firm with the second-largest bitcoin holdings. Tesla is now led by Elon Musk, a millionaire. Musk has never concealed his enthusiasm for Bitcoin and other cryptocurrencies. As such, it was unsurprising when the carmaker disclosed that it owned BTC on its balance sheet.
Anthony Scaramucci and Jack Dorsey, both bitcoin maximalists, lead Galaxy Digital and Block. These firms rank third and fourth in the world in terms of bitcoin holdings. These top four firms together own about 200K BTC, worth around $6.9 billion at current pricing.