Author: Daniel Ramirez-Escudero, CoinTelegraph; Translator: Tong Deng, Jinse Finance
Large tech companies like Amazon have a lot of cash on hand - $87 billion last year - and this cash is losing its purchasing power.
The National Center for Public Policy Research (NCPPR), a think tank based in Washington, D.C., has submitted a shareholder proposal to use Bit as a solution. However, it is unclear whether the tech giants will benefit from this.
NCPPR has been pushing this strategy at Microsoft and Amazon. In both cases, the think tank believes that incorporating Bit into their treasury will protect cash assets and shareholder value from the impact of inflation.
The proposal argues that using a 4.95% consumer price index (CPI) as the inflation rate is a "very poor metric" for measuring the real devaluation of currency, and suggests that the actual inflation rate may be twice as high.
Microsoft and Amazon's cash on hand from 1996 to 2024. Source: Companiesmarketcap
Microsoft has $78 billion in cash, while Amazon has $87 billion. Although Bit could provide a potential hedge, is the risk greater than the reward?
Despite the support of Orange Pill experts and MicroStrategy chairman Michael Saylor, Microsoft shareholders overwhelmingly voted against NCPPR's Bit reserve proposal, indicating that its so-called volatility is a negative factor.
Amazon is next to decide. Will this vote be any different?
Amazon is not a conservative tech company like Microsoft
Valereum CEO Nick Cowan points out that while Microsoft and Amazon are both tech giants, their styles are quite different.
"Given Amazon's reputation for innovation and risk-taking, Amazon's shareholder vote could indeed differ from Microsoft's."
While Microsoft has historically been conservative in its financial and strategic policies, Amazon has a good track record of adopting emerging technologies and exploring novel investments.
"Unlike Microsoft, Amazon's higher appetite for innovation may align with the diversification potential of Bit," Cowan said.
Amazon may vote on the NCPPR proposal at its annual shareholder meeting in May 2025. The proposal urges the company to exceed the typical 1-2% allocation to risk assets in its corporate portfolio.
"At least, Amazon should evaluate the benefits of holding a portion of assets (even if just 5%) in Bit."
Cowan believes this percentage is unlikely. He said: "For a company the size of Amazon, allocating 5% of the portfolio to Bit is ambitious and may not be realistic." "While Bit provides diversification, its volatility and lack of tangible returns make it challenging to justify at that level." He thinks "a smaller experimental allocation similar to Tesla's approach may garner more shareholder support."
Tesla purchased Bit in 2021, which has brought the company significant profits. Initially, Tesla bought $1.5 billion worth of Bit, but sold 70% of its initial position.
Nevertheless, according to data from BitcoinTreasuries.NET, Tesla still holds its Bit reserves (9,720 BTC), worth over $13 billion.
Amazon has billions of dollars in available cash, so it could easily allocate a similar amount of cash to Tesla.
While NCPPR may genuinely hope that Amazon and Microsoft will adopt Bit, Cowan said, a broader strategy is to amplify the information that Bit can be seen as an inflation hedge tool, to "create potential momentum for institutional adoption of Bit".
Do tech giants need Bit as their treasury?
MicroStrategy has made significant strides in incorporating Bit into its core financial strategy.
The company began buying Bit on August 12. On December 11, 2020, it acquired 21,454 BTC for $250 million. Since then, its stock price has soared from $14 to $411, and its market cap has grown from $1.3 billion to nearly $100 billion.
Michael Saylor's bet on using Bit as an inflation hedge has far exceeded expectations, so why don't tech giants follow Saylor's financial model?
However, MicroStrategy's approach is clearly different, as it has used a lot of leverage, making its strategy riskier than Tesla's buy-and-hold strategy.
MicroStrategy's market cap history from 1998 to 2024. Source: Companiesmarketcap
Furthermore, the ratio of Bit to its total market cap transforms its stock into a leveraged Bit proxy.
According to the article, Amazon's market cap is $2.4 trillion, and Microsoft's is $3.3 trillion, so the impact of their Bit adoption would be different from MicroStrategy.
Cowan believes Amazon is in no rush to adopt Bit, as its "core business is very strong". While reallocating some or all of its cash reserves to Bit could hedge against inflation, the risk of deviating from its current financial strategy exists, and some shareholders may view it as a potential liability to its profitable business model.
"The opportunity cost of holding volatile assets like Bit instead of investing in R&D or acquisitions will be a major factor in this decision."
He said: "Allocating a significant portion of funds to Bit could impact Amazon's ability to fund key growth areas such as AWS, AI advancements, and logistics infrastructure." Shareholder voting decisions need to "balance speculative asset acquisitions with critical innovation investments that define Amazon's competitive advantages."
Bit's reputation issues may hinder shareholders
Large tech companies must also consider public perception, as mainstream media can significantly impact their brand and stock price. Although Bit's reputation has greatly improved, it is still associated with speculative trading assets, potential abuse, and environmental issues.
"Negative PR narratives could overshadow potential economic benefits, especially considering Amazon's focus on ESG initiatives and its need to maintain broad appeal among stakeholders."
Amazon has revolutionized the business model by quickly delivering goods to customers' doorsteps. However, according to a 2022 report by the environmental organization Oceana, this model has a staggering impact on the environment, generating over 709 million pounds of plastic waste.
The company has pledged to achieve net-zero carbon emissions by 2040, a decade ahead of the Paris Agreement's target.
Bit's high energy consumption during the mining process has been harshly criticized by environmentalists. However, as the mining infrastructure undergoes more thorough scrutiny, the situation is changing. Despite this shift, the risk of strong public relations opposition remains.
Amazon shareholders must decide whether the company can achieve positive results similar to Tesla or MicroStrategy by using Bit to hedge against inflation, or whether it should avoid the risk and focus on its core business model.
