• Companies from the US and information technology sector hold the most bitcoin
  • MicroStrategy continues its bitcoin acquisition spree
  • Tesla will resume bitcoin transactions once half of bitcoin can be mined using clean energy

Interest in cryptocurrencies among institutional investors surged and more corporate treasuries allocated reserves to cryptocurrencies, especially in the months before its price plummeted in May 2021. As of 28 June 2021, 34 public companies collectively hold over 213,000 bitcoins, according to data from CryptoTreasuries. Together, these represent 1.14% of the total supply of bitcoins in circulation and are equivalent to $7.4 billion based on price on 28 June 2021.
In addition to blockchain and bitcoin mining companies, some companies that do not conduct businesses related to digital assets such as the business intelligence software company MicroStrategy and electric-automobile manufacturer Tesla also hold large amounts of bitcoin on the balance sheet, as bitcoin is seen as an inflation hedge.

Top companies with bitcoin holdings  

Twelve companies from the US together hold over 185,000 bitcoins on their balance sheet, accounting for 87% of the aggregate number of bitcoins held by all 34 public companies, while the share of 13 Canadian companies is much smaller at 9.3%. The top 10 public companies that hold the most bitcoin comprise seven from the US, two from Canada and one from Germany. In addition, those from information technology sector hold the most bitcoin on their balance sheet, with a share of 66.8%, followed by companies from consumer discretionary sector (20.2%) and financial sector (11.8%).

The number of bitcoins owned by the top 10 public companies with the largest bitcoin holdings totalled over 204,000. MicroStrategy is the public company that holds the most bitcoin on the balance sheets, followed by Tesla, Galaxy Digital Holdings, Voyager Digital, Square and Marathon Digital Holdings. MicroStrategy holds approximately 105,085 bitcoins, worth $3.6 billion based on price on 28 June 2021. Galaxy Digital Holdings offers trading, asset management and investment banking services for institutional investors, while also making a sizeable investment in cryptocurrency with its own money. Currently, the company holds around 16,400 bitcoins.

Payments firm Square purchased approximately 4,709 bitcoins for an aggregate price of $50 million in October 2020 and acquired an additional 3,318 bitcoins for $170 million in February 2021. The average price of all its bitcoin purchases is $27,407 per token. The company announced that it has no plan to purchase more bitcoin in May 2021, while it is looking into creating a hardware bitcoin wallet for users to store their cryptos without Square's custody.

Marathon Digital Holdings, a US bitcoin mining company, increased its bitcoin holdings to around 5,518 bitcoins as of May 2021. The company purchased approximately 4,813 bitcoins at an average price of $36,857 in January 2021. From January to May 2021, it has produced 580.5 newly minted bitcoins. Hut 8 Mining, another bitcoin mining company based in Canada, holds more self-mined bitcoin than any other bitcoin miner or public company.

MicroStrategy to acquire more bitcoin

MicroStrategy has allocated a large proportion of its corporate treasuries to bitcoin. Its CEO Michael Saylor has been a leading advocate of bitcoin. The company made its first investment in August 2020 and adopted bitcoin as its primary treasury reserve asset. Acquiring and holding bitcoin has become part of the company’s corporate strategy since February 2021.

MicroStrategy bought 21,454 bitcoins in August 2020, 16,796 bitcoins in September 2020, 32,220 bitcoins in December 2020, 314 bitcoins in January 2021, 19,747 bitcoins in February 2021, 795 bitcoins in March 2021, 253 bitcoins in April 2021, 500 bitcoins in May 2021 and 13,005 bitcoins in June 2021. The company disclosed that these bitcoins were bought for a total of $2.741 billion and at an average purchase price of approximately $26,080 per token.

The company invested more in bitcoin following cryptocurrency price plunge. On 8 June 2021, it announced to sell $500 million of seven-year senior secured notes with an annual interest rate of 6.125% to fund the purchase of more bitcoin. The company increased the size of the offering from $400 million to $500 million as it received around $1.6 billion in orders. Previously, the company had issued $550 million worth of convertible senior notes in December 2020 and another $1.05 billion in February 2021 to add more bitcoin to its balance sheet.

With the proceeds from the sale of the $500 million high yield bonds, MicroStrategy bought an additional 13,005 bitcoins for $489 million in cash on 21 June. It also unveiled a plan to sell as much as $1 billion in common shares for general purposes, which includes additional investment in Bitcoin.

Tesla to resume bitcoin transactions

Tesla bought $1.5 billion worth of bitcoins in January 2021. Elon Musk, Tesla’s CEO, said that the company sold around 10% of its bitcoin holdings in the first quarter of 2021 to demonstrate the liquidity of Bitcoin. The sale generated proceeds of $272 million and the company made $101 million in profits from the sale.

Musk’s comments on social media have exerted great influence on the price of cryptocurrencies. In March 2021, Tesla started accepting bitcoin as a payment option for its electric vehicles. However, on 12 May, Tesla announced to suspend accepting bitcoin as a form of payment, citing concerns over energy consumption. On 17 May, Musk clarified that Tesla has not sold any bitcoin.

On 13 June, Musk said that Tesla will accept bitcoin payments again once miners of the bitcoin can show they are using roughly 50% clean energy. The bitcoin mining council was formally launched on 10 June amid worries over bitcoin’s energy consumption and is open for membership applications. Both Michael Saylor and Musk are facilitators, but its website claims that Musk has no role in the council and Saylor is a key member of the council.

Companies have become more cautious about purchasing cryptocurrencies for their corporate treasuries, mainly due to the fluctuations in the price of the cryptocurrencies. The accounting for cryptocurrencies also remains an issue. US public companies holding bitcoin in their treasuries will need to write down the value of their holdings as an impairment charge if the value of bitcoin falls, except for investment firms or broker-dealers. However, the interest in cryptocurrencies remains strong, which can be shown from the massive excess in demand for MicroStrategy’s high yield bonds.