Bitcoin as a store of value and payment mechanism has been growing in acceptance as evidenced by some publicly traded companies putting a portion of their cash reserves into the cryptocurrency.
Tesla invested more than $1.5 billion in Bitcoin to its corporate balance sheet, noting that the purchase was made with cash not needed for operations. Time Magazine, owned by salesforce.com inc., said it would also add Bitcoin to its balance sheet. MicroStrategy has aggressively urged companies to shift corporate cash into cryptocurrencies like Bitcoin, and also announced it would be paying Board Members in Bitcoin.
TechCXO wanted to know where its CFO partners stood on the issue, so we surveyed 25 CFOs. Many TechCXO clients are privately-held technology startups, and we asked them:
Resistance to Risk, Preserving Limited Cash
By a wide margin, TechCXO CFOs said they would not put cryptocurrencies onto client companies balance sheets. There were 21 “No”; 3 “Yes” and 1 “Maybe”.
When looking at the comments, the resistance was not necessarily due to not seeing crypto or Bitcoin as a legitimate asset, but more in response to their clients’ current cash and risk profiles. Some of the comments added are below.
Currently I would not. Bitcoins are accounted for as intangible assets in the U.S. You cannot recognize gains until you sell but do have to write-down impairment if the price drops. Most of my current companies have limited cash resources. As such, they are risk averse.
Cash requirements precluded consideration:
Crypto is volatile. Our clients’ main goal with their funds is principal protection. Not until they have significant excess cash would I consider this as an investment thesis.
The volatility of cryptocurrency erodes the ability to preserve capital. Most of my companies do not have enough capital to put it at risk.
However, some with more significant cash reserves would consider higher risk investments, even amending policies to do so:
One of my current clients, publicly traded, has raised a significant amount of equity that we have difficulty investing for any type of return. We have discussed amending our Investment Policy to allow up to 10% of investable cash for higher risk/higher reward investments, like Bitcoin.
Still others are ready to go:
One client I have has indicated he wants 5% – 10% of fundraising proceeds to be deposited in Bitcoin.