Not even a personal plea from MicroStrategy’s Michael Saylor could persuade software giant Microsoft to follow in his footsteps and invest in Bitcoin.
Saylor, who turned the company he co-founded into a Bitcoin proxy with more than $40 billion of the cryptocurrency in his possession, made the argument at Microsoft’s virtual shareholder meeting last Tuesday. Even so, investors rejected a proposal that asked the company’s board to evaluate whether diversifying the balance sheet, including Bitcoin, would be in line with the best long-term interests of shareholders.
Saylor spoke on behalf of the Free Enterprise Project, which submitted a nearly identical proposal to Amazon and could repeat the move with other corporations, according to Ethan Peck, deputy director of the shareholder activism group.
Microsoft’s board had already positioned itself against the proposal, claiming that it is already evaluating cryptocurrencies. Voting consultancies Glass Lewis and Institutional Shareholder Services agreed, with Glass Lewis highlighting expert reports that indicate there is no guarantee that adding a cryptocurrency will improve a portfolio’s returns, for example.
As a result, the proposal was rejected, said Keith Dolliver, deputy general counsel at Microsoft, during the broadcast of the shareholder meeting.
Still, rejection is unlikely to discourage similar attempts. With Bitcoin more than doubling in value this year, there is a growing chorus calling for some corporate treasuries to invest in the world’s largest cryptocurrency as a hedge against inflation.
Furthermore, with many shareholders already involved in cryptocurrency-related businesses, voting against such proposals could become more difficult. Microsoft’s main shareholders include BlackRock, State Street and FMR LLC, all of which are already involved in the crypto market and which, according to industry observers, are expected to become more involved.
Activists’ push for Bitcoin is also being driven, in part, by Donald Trump’s return to power as president-elect. Trump promised friendly regulations and policies for the crypto sector, which has contributed to the recent appreciation of Bitcoin, which reached an all-time high of more than US$100,000 this month.
Trump has already talked about establishing a government stockpile of Bitcoin, and Senator Cynthia Lummis, a Republican from Wyoming, advocates that the US buy 1 million Bitcoin over five years and hold the asset for at least another 20 years.
“Given the positive outlook for the crypto sector under a Trump administration, it would certainly be defensible for a company to invest a small portion of its reserves in crypto assets, even if that investment is highly risky,” said Eswar Prasad, professor of trade policy at the University Cornell.
A growing number of companies are investing in Bitcoin, including MARA Holdings, Block and Tesla. Furthermore, MicroStrategy itself has been buying Bitcoin since 2020. The danger lies in the possibility that the cryptocurrency’s strong annual rally could reverse, which could have serious consequences for holders, especially those who increased their leveraged bets on the asset. Saylor stepped down as CEO of MicroStrategy in 2022, following the drop in Bitcoin’s value, to focus on advocating for the cryptocurrency.
“If you want to beat the market, you’re going to need Bitcoin,” Saylor said at the meeting, later adding: “If you do that, you’ll add hundreds of dollars to your stock price.”
In his presentation to shareholders, previously shared on Microsoft shares outperformed by more than ten times. The Free Enterprise Project offered to withdraw the proposal if Microsoft CEO Satya Nadella agreed to meet with Saylor for an hour privately, but the company declined, Peck said.
“All we really want is a sound currency so shareholders don’t lose money to inflation,” Peck said. “Bitcoin’s track record so far has shown that it is the best answer to this.”
