Bitcoin on Balance Sheets

Two posts in less than 24 hours… Didn’t intend on it, but this was too important to not share.

Tesla just announced that it plans to buy $1.5B of bitcoin to add to their balance sheet. It also plans to accept it as a payment method. 

Elon has never been shy to challenge conventional wisdom; if anything, he prefers to have first mover advantage. We know over the last 10 years that when Elon makes a move on something, eventually most follow (e.g. Tesla and electric cars, Space X and commercializing space, and more).

Over the next 12-24 months, we will see news of several publicly traded companies adding BTC to their balance sheet. We don’t have a magic 8-ball, but it’s hard not to imagine BTC touching $100K at some point in the future. It’s simple supply and demand.

Back in Aug 2020, I made a case for adding BTC to one’s portfolio. It’s a great store of value, a hedge against inflation (to some extent), a decentralized currency with a finite supply, a stable infrastructure, and perhaps the best application of blockchain technology (thus far to-date). 

Many people believe in blockchain, but not bitcoin. It’s hard to understand this… It’s like saying you believe in the internet, but not Google (which is one of the best and most robust applications of the internet). 

So, what now? Well, I encourage everyone reading to learn more about bitcoin and blockchain technology. If it makes sense for you and your financial goals, then consider adding it to your portfolio. 

If you run a company, it may make sense to consider adding BTC to your balance sheet. Large publicly traded companies are generating more cash than ever before. That cash is an asset with opportunity costs. Stock buy-backs are an option, but frequent buy backs has poor sentiment associated with it. It shows there’s little M&A activity, not enough investment into future growth of the business (e.g. lack of R&D investment) and more. So, corporations will naturally lean into this asset class since it can be a good store of value and fairly liquid.

At some point, the liquidity in the market will continue to push for asset price inflation. Combined with the new stimulus plan, we will experience some form of inflation in everyday life. Having some exposure to an alternative currency is worth considering.

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