Bitcoins
- A filing submitted by Microsoft to the SEC yesterday reveals that MSFT shareholders will be able to vote on a proposal requesting that the company’s board examines investing in Bitcoin at this year’s shareholder meeting.
- The proposal was made by the right-wing think tank, The National Center for Public Policy Research, who argue that investing in Bitcoin could protect against inflation risks.
- Microsoft’s board opposes the proposal and has recommended to shareholders they vote against it, claiming the company has already examined Bitcoin in detail and considers it too volatile.
A filing made by Microsoft to the Securities and Exchange Commission (SEC) yesterday has revealed that the company’s shareholders will be given the opportunity to vote on a proposal that the board examine investing in Bitcoin.
The proposal was presented by the National Center for Public Policy Research, a right-wing think tank which has also served on the advisory board for extremely conservative political lobbying outfit Project 2025. The proposal highlights the risks of inflation and suggests that investing in Bitcoin is necessary to offset these risks.
Therefore, in inflationary times like these, corporations should — and perhaps have a fiduciary duty to — consider diversifying their balance sheets with assets that appreciate more than bonds, even if those assets are more volatile short-term.
National Center for Public Policy Research Proposal to Microsoft
In response, the Microsoft board has written to shareholders recommending they vote against the proposal. The board argued it’s unnecessary as they’ve already considered the issue in detail — so far deciding not to invest largely due to Bitcoin’s extremely high volatility.
The annual shareholder meeting is scheduled for December 10. To pass, the proposal would require majority support from shareholders.
Related: Microsoft Exec: AI and Crypto Synergy ‘Just Scratching the Surface’
Investing In Bitcoin Can Help Offset Inflation Risk, Claims Proposal
The proposal is focused on Microsoft using Bitcoin to hedge against inflation. It claims that the consumer price index (CPI) is a “remarkably poor and corrupt measure of inflation”, suggesting that the official inflation rate, which has averaged around 5% for the past 4 years, massively understates the true rate of inflation, which it claims could be as high as 10%.
The proposal states that Microsoft’s current investment strategy doesn’t do enough to hedge inflation, investing mostly in government securities and corporate bonds that offer returns barely above CPI.
To combat the devaluation of its assets, it proposes the tech giant’s board examine investing in Bitcoin, which it says has returned 414% over the past five years — claiming this is, on average, 411% better than corporate bonds over the same period.
The proposal does acknowledge that Bitcoin is highly volatile, saying because of this volatility it’s important that the company not hold too much. But the proposal also argues that “Bitcoin is an excellent, if not the best hedge against inflation,” and warns that not holding some of it, “even just 1% of its assets in Bitcoin,” also presents a risk in the current inflationary environment.
Microsoft Board Not Keen on Proposal
The Microsoft board has recommended that shareholders do not support this proposal for two main reasons. Firstly, they’ve already explored crypto and at this point don’t believe it’s a good idea, making the proposal redundant.
Microsoft’s Global Treasury and Investment Services Team evaluates a wide range of investable assets to fund Microsoft’s ongoing operations, including assets expected to provide diversification and inflation protection, and to mitigate the risk of significant economic loss from rising interest rates. Past evaluations have included Bitcoin and other cryptocurrencies among the options considered, and Microsoft continues to monitor trends and developments related to cryptocurrency to inform future decision making.
Microsoft Board’s statement in opposition to proposal
And secondly, the board just seems to think Bitcoin is too volatile to be a worthwhile investment:
As the proposal itself notes, volatility is a factor to consider in evaluating cryptocurrency investments for corporate treasury applications that require stable and predictable investments to ensure liquidity and operational funding.
Microsoft Board’s statement in opposition to proposal
The board further says that its existing treasury management processes are “strong and appropriate” and that the “requested public assessment is unwarranted.”
Jody McDonald Read More