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Corporations investing in cryptos

Corporations investing in cryptos

July 9, 2021 | 

JOHN K MWANIKI |  0 Comments| 

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In the recent past, the number of major companies investing in Bitcoin has continued rising. This has, in turn, driven and fueled the demand for cryptocurrency. Investments from major corporations have become an essential factor in increasing Bitcoin's value since 2017. As investors, major corporations acquire Bitcoins worth several hundreds of millions of dollars. That is a major booster to the value of this crypto. Recently, Elon Musk's Tesla purchased $1.5 billion worth of Bitcoins. 

This has further increased its retail interest. Additionally, it is predicted that this investment will continue boosting BTC's price to a new high. In January 2021, the investments in Bitcoin and other cryptos hit a $1.3 trillion ceiling. That is according to a report that the CoinShares company put out. Since its start, Bitcoin has held its value, and it currently continues to hold the number one spot. Corporations buy coins as funds, reserve assets, and on behalf of their investors. 

Even as its meteoric growth continues, it will be valuable to know the big corporations investing in cryptos

1.Tesla 

Initially, Tesla was purchasing the coins for their balance sheets. In January of 2021, the company indicated that they had bought Bitcoins worth $1.5 billion and filed with the SEC. It also said that the company might buy and hold tokens as assets more frequently or over the long term. After their purchase, the company announced that they would start accepting this crypto as payment for various transactions shortly. 

On March 23rd, this came to fruition, and Tesla began explaining transaction procedures to be followed when paying with Bitcoin. The investment that Tesla made in January is not minor, even by their standards. By mid-January, their $2.5 billion investment increased by a margin of about 55%. The estimated worth of their Bitcoin coins is about $2.35 billion. These same gains can, however, only be recognized once Tesla decides to sell its Bitcoins. 

There have been speculations of Tesla purchasing more Bitcoin and Ethereum tokens. If the company chooses to continue with this strategy, crypto assets could make up a significant percentage of their cash stockpile. 

2.MicroStrategy 

This is another of the big corporations investing in cryptos. On April 5th of 2021, the software company MSTR announced that it had bought 253 Bitcoins. Their value amounted to $15 million, and they bought all their coins in cash. It means that MicroStrategy paid $59,288 for each currency. In 2020 this company purchased 91,579 Bitcoins which cost them $2.226 billion on average. As of April 9th, the Bitcoin Portfolio of MSTR was at $5.344 billion. 

Due to the increase in value of BTC, they have had a jaw-dropping gain of more than $3.08 million since 2020. The company's profits and operating revenue for the past year have been comparably different from its Bitcoin portfolio. MicroStrategy only made an income worth $480.7 million in 2020. They made operating losses of $19.9 million and gross profits worth $389. The operational and free cash flows were $53 million and $50 million, respectively.
 
Still, this would not be adequate to pay for their Bitcoin acquisition, which would cost more than $1.054 billion. Because of their shortage of funds, the company started to issue convertible debt. After discounts, MSTR still had debt worth $454 million. Since that time, the company has perhaps issued more debt worth about $2 billion. The company is leaning towards investing in digital assets as an acquisition strategy. 

3.Square 

SQ is a payments company that accommodates Sellers and Cash App clients interested in buying Bitcoins. In October 2020, Square bought 4,709 tokens that cost them $50 million. Recently in 2021, the company has bought 3,318 more Bitcoins which has set them back $170 million. Currently, Square, therefore, has a Bitcoin asset total of 8,027. As of April 9th, the value of each Bitcoin was $58,360, which put SQ's assets at $468.46 million. That figure represents more than twice its original $220 million investment, a 112% increase. 

In December 2020, the corporation indicated that it had cash worth $3.158 billion in its shareholder letter. Therefore, at that time, their Bitcoin portfolio accounted for 15% of the company's total liquid investments. Of late, it is also promoting Bitcoin purchases on its leading Cash App. At the end of February, Square announced that more than 1 million individuals had bought Bitcoins on Cash App. This information was contained in the Q4 shareholder letter. Just in 2020, an average of 3 million people trader Bitcoins on Cash App. 

4. Galaxy Digital Holdings Ltd 

Galaxy Digital Holdings is one of the corporations investing in cryptos based in New York, but it trades on the TSE. It is also an over-the-counter market in the U.S. The firm is partly an asset management company and partly a merchant bank. It makes its own crypto investments, including Bitcoin. Galaxy Digital Holdings also offers consultancy services, funds investment products for investors, and provides trading facilities. The company is run by Michael Novogratz, a hedge fund manager. 

5.Marathon Digital Holdings 

On April 5th, 2021, MARA released the Q1 preliminary earnings. The mining company announced that they had mined 196 Bitcoins during that quarter. Apart from the tokens mined and purchased by Marathon in April, it already had 5,134.2 Bitcoins in its treasury. By April 9th, each coin was valued at $58,360, making MARA's Bitcoin worth $299.4 million. Still, what captures most people's attention is the 196 Bitcoins mined in the first quarter. 

Because Marathon expects to continue receiving ASIC miners monthly over the next year, it is expected to maintain its minting rate. By March 2020, they expect to have 103,120 ASIC miners in their service. Given such a high number, be ready to witness the company's worth simply explode. 

Take away

Every major organization wants a piece of the cryptocurrency pie when it comes to digital currency. Bitcoin is a preferred option because of its market value. As retail interests rise, so does the token value. These are five of the biggest companies that have invested in crypto, and you should consider monitoring their progress.

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