What you need to know
- Bitcoin has enjoyed something of a rally over the past year, reaching a new all-time high of $73,000 back in the spring, making it the best-performing asset of its type for 2024.
- Improved guidelines at a state level has driven increased confidence in the cryptocurrency, which has even Microsoft seemingly interested in jumping on the crypto train.
- On December 10, 2024, Microsoft plans to let shareholders vote on whether or not to invest in the currency.
Bitcoin has had a pretty good year so far, so good in fact that Microsoft itself is now considering investing in the cryptocurrency.
For those who don't know, bitcoin is an industry-leading cryptocurrency whose "scarcity" is artificially perpetuated by processing-heavy math calculations. Dubbed crypto "mining," the practice uses GPUs like those supplied by NVIDIA to perform increasingly complex calculations, in exchange for fragments of a bitcoin token. Those bitcoins are then exchanged and traded as you might otherwise trade gold or other investable commodities, verified by a blockchain. A notable difference is that the market for bitcoin trading is always online, 24/7, and has been the subject of various controversies.
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Cryptocurrencies are often exploited by criminals to avoid the same kinds of scrutiny that traditional currencies face, and they also require vast amounts of processing power, which has led to criticism over their contributions to climate change and carbon emissions. Bitcoin is increasingly mined using renewable energy, however, and improvements in the regulatory environment have also made it easier to track criminals that exploit the currency for their own ends.
Indeed, many of those regulatory improvements over the past year have led to a boost in confidence in the currency over the past year. It hit a new high of $73,000 per coin earlier in the year and has maintained a steady rate ever since. Bitcoin has outperformed various other similar assets too, and is often seen as a safe haven "off the grid" digital investment that can potentially avoid similar pitfalls faced by other assets, although bitcoin seems to generally react similarly in line with traditional stocks when volatility occurs.
In any case, the confidence boost seems to have landed well at Microsoft, which plans to give its investors a vote on whether or not the company itself should start investing in the currency, per a new SEC filing.
JUST IN: Per an SEC filing, Microsoft will have a proposed board resolution for an "Assessment of Investing in Bitcoin".The board is recommending that shareholders vote AGAINST the proposal. pic.twitter.com/0WveygitH9October 24, 2024
Reportedly, Microsoft's board of directors is investing that shareholders vote against the proposal, and it's not hard to see why. Bitcoin is notoriously volatile. Tesla lost over $100 million playing around with the currency in 2022, although it still maintains mountains of assets in the currency. Elon Musk's car firm recently moved $750 million of its cryptocurrency assets into private wallets, which has some fearing a big sell-off may be around the corner. The overall market seems to be generally optimistic, however, with bitcoin almost hitting its spring highs again through October 2024.
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Could Microsoft really invest in Bitcoin?
It's not entirely surprising that Microsoft may seek to invest in bitcoin. For all its volatility, it has remained a strong performer over time, and will probably only get stronger as technology improves, regulatory oversight improves, and nation-state politicians actually educate themselves on what it actually is. I don't hold any myself, but like many, I sure as hell wish I bought in early when it first arrived on the scene back in the day. It would be unlikely to do much for Microsoft's so-called climate pledge credentials, though.
Microsoft's board of directors is advising shareholders not to vote in favor of the investment, which will likely sport enough influence to prevent the motion from going through. Microsoft wouldn't be the first traditional company to jump on the bitcoin train, though. Beyond Tesla itself, companies like BlackRock, Square, and various others have bitcoin holdings. Nation states like the United States and Germany have also massive bitcoin holdings, owing in part to legal forfeitures from law enforcement activities. Germany in particular sold billions of dollars worth of its crypto holdings over the past year, much of which was seized from criminals and the like.
As usual, if you plan to invest in Bitcoin or, well, anything, be sure you're only investing as much as you'd be willing to lose, and speak to a qualified financial advisor!
Do you think Microsoft should invest in Bitcoin or any other cryptocurrency? Hit the comments.
