Shareholders at Microsoft have rejected a proposal to invest in Bitcoin [BTC], despite expectations of substantial market growth.
The initiative was spearheaded by MicroStrategy CEO Michael Saylor, who urged Microsoft to broaden its investment portfolio by assigning a portion of its reserves to Bitcoin.
Saylor pointed out BTC’s standing as the seventh-largest global asset, with its market capitalization predicted to exceed $2 trillion soon and possibly reach over $200 trillion by 2045.
Yet, worries about the currency’s volatility prompted the board’s verdict, backed by key institutional investors such as Vanguard and BlackRock.
Microsoft’s Embrace of AI over Digital Currency
Instead, Microsoft is prioritizing AI innovation and exercising caution regarding crypto investments, emphasizing a strategic pivot away from digital assets in favor of cutting-edge technological progress.
Commenting on this shift, Satya Nadella, Chairman and CEO, stated in a proxy statement,
“AI stands as one of the most transformative technologies of our era, and we believe it will profoundly shape the productivity levels for individuals, organizations, and entire industry segments to help tackle some of the most critical global challenges.”
Nadella further stated,
“We understand that Microsoft can only thrive if the world is thriving. Our focus is on ensuring that the world benefits from the broad technological transition to AI while mitigating associated risks.”
Reasons Behind the Decision
The proposition put forth by the National Center for Public Policy Research advocated allocating 1% of Microsoft’s assets, around $784 million, to BTC as a safeguard against inflation.
Despite the proposal’s inventive nature, concerns regarding Bitcoin’s volatility and potential risks to financial stability guided the board’s choice.
Major institutional investors like Vanguard, BlackRock, and State Street, collectively possessing about 70% of Microsoft shares, aligned with the board’s stance, striking a balance between caution and their broader crypto interests.
This underscores Microsoft’s dedication to stability, prioritizing predictability over risk.
BTC’s volatility, significant market swings, and the threat of substantial losses — demonstrated by its 70% decline in 2022 — likely influenced Microsoft’s refusal of the proposal.
Moreover, the strategic utilization of cash flows to sustain operations and prospective investments is crucial, as liquidating Bitcoin during market downturns could result in losses.
Furthermore, ongoing regulatory uncertainties surrounding cryptocurrencies introduce an additional layer of complexity.
Consequently, Microsoft remains committed to low-risk assets like treasury bonds to uphold long-term stability and sustainable progress.
Varied Community Responses
As expected, Microsoft’s decision to decline BTC investment triggered significant criticism and ridicule from the crypto community, as evidenced by Bitcoin Archive in a recent X post.
Saylor also weighed in and remarked,
“In 5 years, they’ll understand. Everyone acquires Bitcoin at the price they merit. #BTC doesn’t delay; it promptly transfers wealth to those who perceive.”
Despite this, countless supporters defended Microsoft, highlighting the company’s emphasis on long-term stability and prudent strategy.