Uploaded July 2025 | Updated September 2026, 1 week ago
The success of MicroStrategy, a company that started in software but has evolved to effectively become a Bitcoin SPAC, has led to a debate about whether companies should be moving their cash from their current holdings (usually close-to-riskless and liquid, low return investments) to bitcoin. I believe that as a general principle, this is a bad idea for many reasons - it does not have the shock absorber feature that cash is supposed to have, it steps on a company's business narrative, corporate managers are terrible traders (bitcoin or any other investment) and it opens the door to fraud and self-dealing. There are four exceptions - companies that are perceived to have a bitcoin savant at their helm (a la MicroStrategy), companies who are in the bitcoin business (PayPal & Coinbase), companies in countries with failed currencies and companies that have failed business models but have, through accident or by design, become meme stocks (AMC & Gamestop). Even with these exceptions, there have to be guardrails - shareholder buy in, transparency on bitcoin holdings/transactions and clear accounting rules on marking to market. If you are a bitcoin advocate, getting institutional buy in from investors and companies may seem like a bonus (pushing up demand and price), but it will change the characteristics of the bitcoin market in ways that you may not like.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/BitcoinCash.pdf
Blog post: aswathdamodaran.blogspot.com/2025/07/to-bitcoin-or-not-to-bitcoin-corporate.html
The success of MicroStrategy, a company that started in software but has evolved to effectively become a Bitcoin SPAC, has led to a debate about whether companies should be moving their cash from their current holdings (usually close-to-riskless and liquid, low return investments) to bitcoin. I believe that as a general principle, this is a bad idea for many reasons - it does not have the shock absorber feature that cash is supposed to have, it steps on a company's business narrative, corporate managers are terrible traders (bitcoin or any other investment) and it opens the door to fraud and self-dealing. There are four exceptions - companies that are perceived to have a bitcoin savant at their helm (a la MicroStrategy), companies who are in the bitcoin business (PayPal & Coinbase), companies in countries with failed currencies and companies that have failed business models but have, through accident or by design, become meme stocks (AMC & Gamestop). Even with these exceptions, there have to be guardrails - shareholder buy in, transparency on bitcoin holdings/transactions and clear accounting rules on marking to market. If you are a bitcoin advocate, getting institutional buy in from investors and companies may seem like a bonus (pushing up demand and price), but it will change the characteristics of the bitcoin market in ways that you may not like.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/BitcoinCash.pdf
Blog post: aswathdamodaran.blogspot.com/2025/07/to-bitcoin-or-not-to-bitcoin-corporate.html
