MicroStrategy Is Diversifying Its Cash Into Alternative Assets, Including Bitcoin

By Yassine Elmandjra | @yassineARK

Bitcoin is beginning to infiltrate corporate balance sheets. In its most recent earnings call, for example, MicroStrategy – a business intelligence and cloud-based services company – announced a new capital allocation strategy involving bitcoin.

During the next 12 months, MicroStrategy will allocate $250 million, or half of its cash and cash equivalents, from USD into alternative assets including gold, silver, and bitcoin. In its earnings call, MicroStrategy CEO Michael Saylor explained that alternative assets have been appreciating as the dollar has weakened. With a relatively large reserve of excess cash, MicroStrategy is rethinking its treasury management strategy.

As Saylor noted, “It makes sense to shift our treasury assets into some investments that can’t be inflated away or are less likely to be inflated away including gold, silver, and bitcoin. As we pursue alternative investment strategies for our treasury assets, we expect that we will have more volatility, at least as measured in U.S. dollar terms, looking forward.”

If currencies continue to devalue relative to gold and bitcoin, MicroStrategy’s shift toward inflation hedges like gold and bitcoin could be the start of a larger trend, encouraging other companies to diversify their cash balances into bitcoin.

Catherine Wood, ARK Invest CEO, is a shareholder of 24/7 Wall St. LLC.