Amazon was advised to add Bitcoin treasury
Key Takeaways:
- Bitcoin has outperformed corporate bonds in short and long-term growth, showcasing its potential as a treasury asset.
- Companies like MicroStrategy demonstrate how Bitcoin investments can lead to significant stock performance gains.
- Adopting Bitcoin involves balancing rewards with risks like volatility and management challenges, requiring a cautious approach.
How is the Bitcoin treasury proposal for Amazon going?
The National Center for Public Policy Research (NCPR), a policy think tank in Washington D.C., has proposed an idea for consideration on adding Bitcoin to the Amazon treasury during its April 2025 shareholder meeting. That, of course, is the most contentious proposalone might ask, should an e-commerce giant take that gamble in entering the crypto market?
The National Center for Public Policy Research (NCPR)
NCPR said the Consumer Price Index (CPI) the present measure of inflation is an extremely poor proxy for the degree of the dollars devaluation. They argue that real inflation may be as high as twice the published CPI figure, which was 4.95% at the time, eating significantly into Amazons $88 billion in cash and short-term cash equivalents. NCPR hedged with Bitcoin to protect shareholder value: Bitcoin has outperformed corporate bonds.
Comparison Table by Growth Performance between Bitcoin and Corporate Bonds:
| Asset | 1-Year Growth (%) | 5-Year Growth (%) |
| Bitcoin | 131 | 1246 |
| Corporate Bonds | 126 | 1242 |
NCPR added, Bitcoin has outperformed corporate bonds both in the very short and long run. Data shows that Bitcoin has gained 131% in 2024 and 1246% over the last five years, against 126% and 1242% for corporate bonds, respectively.
MicroStrategy: The case of success for this strategy
NCPR uses the case of MicroStrategy, which has been accumulating a lot of Bitcoin in its treasury, as proof of this strategys success. Since MicroStrategy started investing in Bitcoin, its stock has grown robustly, far outpacing Amazon in growth rate.
More News: Microstrategy Borrows $205 Million To Purchase More Bitcoin
Stock Growth Figures: From the start of Bitcoin investment to 12/09/2024
- MicroStrategy (MSTR): Up 594%
- Amazon (AMZN): Up 57%
Growth of MicroStrategys stock price compared to Amazons. Source: TradingView
Success for MicroStrategy has seen other companies such as Marathon Digital (MARA) and Genius Group invest their treasuries into Bitcoin. Marathon Digital has invested $1 billion in buying 6,474 Bitcoin. Genius Group converted its assets to Bitcoin.
Counterarguments
Though NCPRs proposition looks convincing, there are opposite arguments on the subject. According to the critics, Bitcoin is a high-volatility asset that may go up or come down tremendously on any given day. Using money to buy Bitcoins will result in substantial losses. Amazon would, therefore, be conservative and very cautious of such a dangerous investment decision due to its huge size.
In addition, Bitcoin management would be quite burdensome in a big company like Amazon. These assets would need expertise dealing with cryptocurrency, accompanied by advanced security systems to ensure they are in a good position to counter cybersecurity threats and possible hacks.
Point of view on the topic
Adding Bitcoin to treasury is a complex decision; weighing the potential benefits associated with it against the possible risks involves serious consideration as to whether Amazon should do this. Although the historical performance of Bitcoin as compared to bonds is quite enticing, the high volatility remains a very serious concern.
Probably a wiser investment strategy would be to get wet, so to speak, by investing a small portion in Bitcoin as opposed to making the large investment as suggested by NCPR.
The second and final recommendation pertains to Amazon considering accepting Bitcoin as a form of payment. This is less risky than direct investment in Bitcoin and might be more appealing to customers.
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