Amazon has been proposed to establish a Bitcoin treasury, and Microsoft is about to vote on the decision. Will large companies favor using Bitcoin to hedge against inflation?

Amazon is being proposed by a Washington think tank, the "American National Center for Public Policy Research", to include Bitcoin in the company's financial reserves to hedge against inflation risks. At the same time, Microsoft is also facing a similar proposal and will vote on the possibility of Bitcoin investment at its annual shareholder meeting on December 10. Although Microsoft's board of directors recommends that shareholders oppose this proposal, the related discussions reflect the potential of cryptocurrencies as an investment tool for large companies, as well as the increasing acceptance of cryptocurrencies in corporate financial management and investment strategies.

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Think tank suggests: Amazon should establish a BTC financial reserve to hedge against inflation risk

Recently, the National Center for Public Policy Research, a think tank located in Washington, D.C. that advocates for free markets, submitted a shareholder proposal to Amazon, suggesting that the company consider adopting a BTC corporate financial reserve strategy at its annual shareholder meeting in April 2025.

The proposal points out that with increasing inflationary pressures, especially the devaluation risk associated with US dollar reserves, adopting BTC as a reserve asset can help Amazon effectively hedge against inflation risk, thereby protecting the long-term interests of shareholders.

The think tank cites current inflation data in the proposal. The Consumer Price Index (CPI), used to measure inflation, currently shows an inflation rate of 4.95%, but the proposal emphasizes that CPI often underestimates the actual currency depreciation, and the actual inflation rate may be twice as high as the CPI figure.

The letter states that this seriously erodes the value of Amazon's $88 billion in cash and short-term cash equivalents. To protect the value of shareholder assets, BTC should be used to hedge this risk.

The National Center for Public Policy Research wrote in the letter: "As of December 6, 2024, the BTC price has increased by 131% year-over-year, outperforming corporate bonds by an average of 126%. Over the past five years, the BTC price has risen by 1246%, outperforming corporate bonds by an average of 1242%."

The proposal also mentions that the stock of MicroStrategy, a BTC holder, has outperformed Amazon stock by 537% over the past year. And they are not the only ones doing this. Institutional and corporate adoption of BTC is becoming increasingly common: more publicly traded companies, such as Tesla and Block, have added BTC to their balance sheets; Amazon's second and fourth largest institutional shareholders - Blackstone and Fidelity - respectively offer BTC ETFs for their clients; the US government may establish a BTC strategic reserve by 2025.

The think tank proposes at the end that Amazon should allocate at least 5% of its assets to BTC to protect the value of its financial reserves.

MicroStrategy and its founder Michael Saylor have promoted the corporate BTC financial reserve strategy, which is now gaining attention in companies and pension funds. According to MicroStrategy Tracker data, the company's BTC holdings are currently worth over $40 billion, netting MicroStrategy a profit of about $17 billion.

Microsoft will soon hold a shareholder vote to decide whether to buy BTC

Meanwhile, an important policy tailwind is that the Financial Accounting Standards Board (FASB) will officially adopt fair value accounting for BTC starting in fiscal years beginning after December 15, 2024. Under the current GAAP rules, companies holding crypto assets must check for impairment annually, and more frequently when events or circumstances indicate the asset is more likely to be impaired. In other words, companies holding cryptocurrencies can only report a decrease in the value of their crypto assets, not an increase, until the crypto assets are sold according to the rules for intangible assets with indefinite useful lives. FASB's crypto update aims to change this reporting, to improve the accuracy of company financial statements. The upgrade of accounting standards will promote the adoption of BTC as a reserve asset by global enterprises.

In addition to Amazon, Microsoft Corporation is also facing a similar shareholder proposal. Microsoft will vote on whether to "assess investing in BTC" at its annual shareholder meeting on December 10. The proposal was also submitted by the conservative think tank National Center for Public Policy Research, but the board recommends that shareholders vote against the proposal, saying it is "unnecessary", and states that the company's management has "carefully considered" the relevant issues.

In a filing with the U.S. Securities and Exchange Commission, Microsoft said its global finance team regularly evaluates a variety of investment assets, including cryptocurrencies, to achieve diversification and risk management, and has considered BTC in the past, but "as the proposal notes, volatility is one factor in evaluating the application of crypto investments in the company's treasury...Microsoft has established robust and appropriate processes to manage and diversify its corporate treasury to benefit shareholders in the long term, so this public evaluation request is unnecessary."

Nevertheless, with the rise in BTC price and the submission of the Amazon shareholder proposal, the situation may change. Earlier this month, Michael Saylor gave a 3-minute speech at the Microsoft board meeting, and according to his published BTC strategy slides, he proposed that BTC is the core opportunity of the next technological revolution, and suggested that Microsoft adopt BTC as a core corporate strategy. He believes that BTC is "digital capital" and that its market capitalization has the potential to grow from the current $2 trillion to $280 trillion by 2045, surpassing traditional assets such as bonds and gold in the current $900 trillion global asset market.

It is worth noting that if the proposal is passed, Microsoft will become the largest publicly traded crypto investor, surpassing MicroStrategy and Tesla, and its move may have a demonstrative effect on other large companies. According to the forecast platform, investors currently believe the probability of this proposal passing is not high, at only 13%.

Amazon has purchased crypto domains, rumored to launch an NFT market, but is still actively exploring

Returning to Amazon, the e-commerce giant's relationship with cryptocurrencies has been rather complex. As early as April 2014, Amazon decided not to accept Bitcoin (BTC), citing customer preference. Interestingly, a few months after this decision was announced, Amazon's competitor Overstock.com became the first major retailer to accept Bitcoin as a payment option and achieved initial success, with Overstock CEO Patrick Byrne at the time stating that Amazon would eventually have to "follow suit". However, despite overall market capitalization and adoption improvements, Amazon has continued to refuse Bitcoin payments.

Nevertheless, Amazon has not completely "distanced" itself from cryptocurrencies. In May 2014, shortly after announcing no cryptocurrency plans, Amazon was granted a patent related to Bitcoin, allowing the use of digital currencies to pay for cloud computing services on Amazon Web Services (AWS). However, this patent was actually filed in March 2012, with the mention of cryptocurrencies only as a payment method.

In November 2017, there were reports that Amazon had purchased several cryptocurrency-related domain names, including "amazoncryptocurrencies.com", "amazoncryptocurrency.com", and "amazonethereum.com". At the time, it was also noted that "amazonbitcoin.com" redirected to Amazon's main website.

Amazon has also launched Amazon Coin, though not a cryptocurrency, but a digital currency introduced in 2013 for Kindle e-book owners. Despite some public interest, the coin did not see widespread adoption.

In April 2018, Amazon won a patent related to a subscription information system described as a "streaming data marketplace". The company claimed it could "identify (Bitcoin) transaction participants" for governments and law enforcement agencies. This document was filed in June 2014.

In 2019, Amazon Web Services (AWS), the cloud service provider, launched Amazon Managed Blockchain. Amazon Managed Blockchain (AMB) is a fully managed service designed to help you build resilient Web3 applications on public and private blockchains.

To date, Amazon has not officially launched an NFT marketplace. However, rumors about Amazon potentially launching an NFT market in April 2023 circulated in March 2023, but these rumors have not materialized.

Currently, more and more large companies are starting to focus on how to use digital assets like Bitcoin to hedge against currency devaluation risks. Especially the successful case of MicroStrategy has shown that incorporating Bitcoin as part of financial reserves can bring significant capital appreciation. The attitudes of large enterprises like Microsoft and Amazon may be key in determining whether this strategy is widely adopted.

The adoption of the Bitcoin treasury strategy will depend not only on the maturity of the technology and market changes, but also on the management's deep understanding of the risks and returns. Whether Bitcoin can become a stable, long-term value reserve in future financial management and asset allocation will affect the decisions of more companies.

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