On October 24, Microsoft filed a document with the US Securities and Exchange Commission (SEC), revealing a surprise in its annual shareholder meeting agenda on December 10.
In addition to routine items like board member elections, approval of independent auditors, and reporting on artificial intelligence (AI) misinformation issues, one proposal stood out: “Bitcoin Investment Review.” Notably, Microsoft’s board of directors recommended that shareholders vote against the proposal.
Microsoft's Cash Position and Its Potential Impact on Bitcoin Price
As of its second-quarter 2024 financial report, Microsoft had $76 billion in cash and equivalents. If shareholders pushed the company to allocate 10% of that cash to Bitcoin (BTC), the investment would be worth $7.6 billion.
Top Bitcoin Holders | Source: River
At an average price of around $70,000 per Bitcoin, this would equate to more than 104,000 BTC – eleven times more than Tesla’s Bitcoin holdings (9,720 BTC), but still significantly less than MicroStrategy’s massive investment strategy, which currently holds 252,220 BTC. However, with Bitcoin’s supply dwindling – more than 80% of BTC haven’t been traded in over six months and BTC balances on exchanges at their lowest in over four years – a major investment from Microsoft could cause a supply shock.
Shareholder Voting Process in the United States
In public companies in the US like Microsoft, shareholders typically have the right to vote on major decisions at annual meetings. Votes on special proposals, like investing in Bitcoin, are usually non-binding but can reflect shareholder sentiment and put pressure on the company if they gain significant support.
Reid Hoffman, founder of LinkedIn and board member of Microsoft, expressed his support for Bitcoin in an interview with Yahoo Finance. Hoffman sees Bitcoin as a “digital store of value” and emphasizes its role in reshaping the future financial system. Hoffman is also an early investor in Xapo, a major Bitcoin custody service provider.
If Microsoft decides to invest in Bitcoin, the company could choose to buy it directly on exchanges or through Bitcoin ETFs for indirect exposure. Another option is to use derivatives like call options, which allow for increased market exposure without committing all of the capital up front.
While it is unlikely that Microsoft will invest in Bitcoin in the short term, shareholder pressure is highlighting the growing appeal of Bitcoin, which could encourage other businesses to consider the sector.
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