Michael Dell, tech giant Dell Technologies’ founder and CEO, sparked a surge of excitement with a recent social media post hinting at Bitcoin adoption. On June 21st, 2024, Dell tweeted “Scarcity creates value,” a phrase often linked to Bitcoin due to its capped supply of 21 million tokens. This cryptic message caught the attention of Bitcoin proponent Michael Saylor, who Dell retweeted alongside an image of Cookie Monster devouring Bitcoin. The market buzzed with speculation – could Dell be exploring Bitcoin as an investment for himself or his company?
Dell’s recent financial maneuvers add context to this potential Bitcoin investment. Since returning public in December 2018, Dell Technologies’ stock has skyrocketed nearly fivefold. The company’s Class C common stock has quadrupled in value over the past 18 months alone, rising from $40 to $145 per share. This surge has significantly boosted Dell’s net worth, propelling him to the 14th richest person globally with an estimated wealth of $120 billion.
Furthermore, Dell cashed out a substantial $2.1 billion in 2024 while maintaining a controlling 58% ownership stake in the company. This signifies significant available capital that could be deployed into the Bitcoin market, especially considering potential future declines in the U.S. dollar’s value due to rising national debt.
Joe Consorti, an analyst at Bitcoin Layer, a global macro research firm, believes companies like Dell Technologies stand to benefit from Bitcoin adoption. The rise of cost-cutting artificial intelligence technologies could lead to excess cash reserves for corporations.
Consorti proposes that “outsized returns on reserves during this AI boom” could provide a unique opportunity for capital allocation, highlighting a period of rapid and competitive growth in computer manufacturing. He emphasizes that Dell has the necessary resources, citing the company’s $5.83 billion cash reserves.
Even a small allocation of Bitcoin in a corporate balance sheet, perhaps 1%, could offer a competitive edge. For instance, allocating 1% of Dell’s cash reserves translates to $58.3 million, which based on Bitcoin’s historical 103.5% annualized returns over the past decade, could potentially grow to $118.7 million in just one year.
Historical Examples and the Skeptics
Companies like MicroStrategy, led by Michael Saylor, serve as an example of successful Bitcoin investments. Their strategic BTC acquisitions have yielded a staggering profit of approximately $6.33 billion in recent years. However, some prominent investors, like Warren Buffett, remain hesitant. Hypothetically, a 1% allocation of Berkshire Hathaway’s net portfolio to Bitcoin over five years could have increased returns from 214% to 240%.
Despite this, Consorti maintains a bullish stance, stating that “Bitcoin is the single best asset to position yourself in for outsized risk-adjusted returns over any multi-year timeframe.” He argues that ignoring Bitcoin could be detrimental to shareholder value.