5 companies foraying into the growing world of cryptocurrency
By Pavithra R
The cryptocurrency market is witnessing rapid growth with its total value of $1 trillion in Jan 2021 to over $1.3 trillion as of Feb 2021. Bitcoin’s mainstream acceptance stands to grow exponentially as more institutional investors embrace cryptocurrencies, paving the way for future entrants to follow their path. The growth has primarily been driven by institutions such as MicroStrategy and Tesla purchasing Bitcoin on the open market, which both announced direct purchases of Bitcoin exceeding billions of dollars in current value.
BitGo, a digital asset financial services company, has outlined a list of private and public companies that are the first movers to add Bitcoin to their balance sheet or portfolios. The articles list five well-known entities which have embarked on their journey into the world of cryptocurrency, either by internal adoption of Bitcoin reserves, becoming active managers of sizable crypto portfolios, or otherwise having substantial exposure to digital assets.
Tesla: Run by Elon Musk, the publicly traded automotive and clean energy company Tesla announced it had allocated $1.5 bn worth of Bitcoin to its treasury reserve, making up 8% of the company’s $19.4 bn in cash and liquid assets. Musk has also announced intends to accept Bitcoin for payment in the near future. Musk’s latest announcement was not his first foray into the cryptocurrency ecosystem; Recently, the CEO caused a surge in volume and price appreciation in both Dogecoin and Bitcoin with a series of cryptic Tweets.
Galaxy Digital Holdings: Former Goldman Sachs veteran and renowned Bitcoin bull Michael Novogratz’s Toronto Stock Exchange-listed asset management firm has a material holding in Bitcoin of $176.4 mn as of Sept 2020, according to financial results revealed by the firm. In addition, Galaxy Digital acquired two cryptocurrency firms (Drawbridge Lending & Blue Fire Capital) to make way for bigger institutional demand for Bitcoin in Nov 2020. Galaxy also launched a new business unit this January dedicated to offering a suite of financial services and products for Bitcoin miners.
MassMutual: In Dec 2020, American insurance and financial services giant MassMutual unveiled that it had invested $100 mn into Bitcoin through the New York Digital Investment Group (NYDIG), along with a $5 mn equity investment. Renowned for being a prudent investor, MassMutual’s entry into Bitcoin marks a critical milestone for the digital asset, which may serve as a bellwether to other insurance companies and pension funds to follow it into the space. While it is unsurprising to see companies at the leading edge of technology like Tesla or PayPal embrace Bitcoin, seeing a centuries-old insurance monolith enter the space so emphatically may mark a true sea change.
Marathon Patent Group: The Nasdaq-listed cryptocurrency mining company swapped $150 mn of its cash treasury for 4,813 Bitcoin at the end of Jan 2021 through the New York Digital Investment Group (NYDIG). Formerly known as American Strategic Minerals Corporation, Marathon has enjoyed renewed relevance and a resurgent share price since the company shifted its business strategy to Bitcoin mining over the past year.
MicroStrategy: Bitcoin’s institutional legitimacy was set in motion when the world’s largest publicly traded business intelligence company, MicroStrategy, announced a balance sheet allocation to Bitcoin worth an initial $250 mn in August 2020. By the end of 2020, the company had amassed an aggregate of over 70,000 BTC after subsequent investments of $175 mn in September, and another $50 mn in December. MicroStrategy’s CEO Michael Saylor has become Bitcoin’s most visible proponents, and he recently hosted a well-attended “Bitcoin for Corporates” summit in which he spoke to guests from a variety of corporations on the advantages of emulating MicroStrategy’s capital allocation.
Consequently, MicroStrategy’s several shareholders have also attained indirect exposure to Bitcoin, including the sovereign wealth fund Norwegian Government Pension Fund (1.5%), American asset managers BlackRock (15.2%), The Vanguard Group (11.7%), and Renaissance Technologies (2%), owner of the Medallion funds considering Bitcoin futures. BlackRock is also reportedly adding Bitcoin as an eligible investment to 2 of its funds: BlackRock Strategic Income Opportunities & BlackRock Global Allocation Fund Inc.
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