Microsoft Urged to Allocate 1% of Its $523B Balance Sheet to Bitcoin

If just 1% of its balance sheet were allocated to bitcoin, the move would drive significant demand for the cryptocurrency.

Microsoft, the third-largest company in the world by market capitalisation, could drive significant demand for bitcoin if just 1% of its balance sheet were allocated to the cryptocurrency, according to a proposal submitted to the company by the National Center for Public Policy Research (NCPPR).

The proposal, which is up for a vote at Microsoft’s annual meeting on 14 December, would not mean immediate bitcoin purchases. Instead, it would compel Microsoft’s board to conduct an assessment to determine if diversifying its balance sheet with bitcoin is in the long-term interests of shareholders.

In its supporting statement, the NCPPR argues that during consistent inflation, a company’s success is judged not only by how well it conducts business but also by how well it stores profits. According to the Consumer Price Index (CPI), the inflation rate in the US averaged 5% over the past four years. A measure that the NCPPR criticises as poor and corrupt, suggesting that the true inflation rate could be significantly higher. Therefore, corporations have a fiduciary duty to protect profits from debasement in addition to increasing profits.

The NCPPR goes on to argue that Microsoft is failing to protect its assets from debasement, the majority of which is invested in US government securities and corporate bonds. The NCPPR claims “Bitcoin is an excellent, if not the best, hedge against inflation” while acknowledging the volatility of the asset. They suggest companies, at a minimum, evaluate the benefits of allocating just 1% of their assets into bitcoin.

Microsoft’s board recommends a vote against the proposal. They state that an assessment of bitcoin is unnecessary because Microsoft’s management has already carefully considered the topic. They also argue that corporate treasuries require stable and predictable investments to ensure liquidity and operational funding.

After NCPPR’s proposal was made public Executive Chairman of MicroStrategy, Michael Saylor, posted on Twitter offering to discuss the matter with Microsoft’s CEO, Satya Nadella.

In 2020, MicroStrategy became the first publicly traded company to adopt bitcoin as its primary reserve asset. The company has since accumulated more than 402,000 bitcoins (worth more than $38bn) and has plans to raise a further $42bn over the next three years to buy more. The NCPPR cited MicroStrategy as a successful case study of Bitcoin adoption.

After Satya Nadella declined Michael Saylor’s offer for a private meeting, Saylor delivered a concise three-minute presentation to Microsoft’s Board of Directors, including Nadella, advocating for Bitcoin adoption. Moving quickly through 44 slides, Saylor outlined the growing political momentum behind Bitcoin, highlighting the pro-crypto stance of Donald Trump and the incoming administration, as well as the Cynthia Lummis-backed US Bitcoin Strategic Reserve Bill.

He presented four Bitcoin treasury strategies, each reflecting varying levels of commitment to the cryptocurrency, and provided scenario analyses for each. The most ambitious of which, called the “Triple Maxi,” suggested Microsoft could add $4.9trn to its market cap if the company fully embraced the cryptocurrency. Whether or not Microsoft invests in Bitcoin, the proposal reflects a broader shift in the Overton window regarding the cryptocurrency’s legitimacy.

Once dismissed as “magic internet money,” Bitcoin is now being seriously considered as part of the financial strategies of some of the world’s largest corporations.