When the Bitcoin concept was first introduced in a whitepaper by the anonymous Satoshi Nakamoto back in 2008, it’s unlikely that anyone predicted the extent of its future influence. By 2025, publicly traded businesses now collectively hold Bitcoin assets worth more than $103 billion.
The amount of Bitcoin held by these organizations has grown by 159% in the last five years, showing a substantial climb in cryptocurrency collection among publicly listed businesses. As a consequence, corporations form a substantial portion of the major Bitcoin holders.
Within cryptocurrency circles, these companies are referred to as Bitcoin proxy companies or just “proxies”. They offer investors an opportunity to engage in a unique form of investment referred to as “Bitcoin proxy investing.” Bitcoin proxy investing includes purchasing shares in businesses that have sizeable Bitcoin investments. This provides indirect exposure to Bitcoin by conventional stock market mechanisms, which may be appealing if direct Bitcoin buying is unfeasible or preferred. Despite the potential for substantial returns, this method carries significant risk, including possible loss of the whole invested capital. However, it might be a worthwhile method to diversify your investment portfolio and take advantage of Bitcoin’s inherent volatility.
Key Takeaways
- The number of publicly listed firms that have Bitcoin on their balance sheet has increased by more than double since 2024, which indicates ongoing demand.
- Purchasing stock in BTC-heavy businesses allows for exposure to Bitcoin via Bitcoin proxy investing, but it is high risk.
- By using this strategy, organizations can build capital and hedge against inflation.
- Significant quantities of BTC are held by firms such as MicroStrategy (MSTR), Marathon (MARA), and Coinbase (COIN).
- Profits can be substantial if you invest in these firms, however losses may be heavy in bearish cryptocurrency markets.
What Companies Are Heavily Invested in Bitcoin?
Companies typically keep their cash in safe assets like Treasury Bills and bonds in order to protect their investments. However, Bitcoin offers them the possibility of producing even higher returns. This boosts the worth of shareholders. In favorable markets, Bitcoin proxy firms may frequently outperform financial assets, including equities in general.
Bitcoin treasury businesses gather funds through conventional methods like convertible bonds and equities, and then utilize the proceeds to purchase Bitcoin when it is cheaply priced. When you invest in these businesses, you don’t have to worry about timing the market or safeguarding your BTC.
Most Bitcoin treasury businesses are situated in the United States. As of July 29, the top five companies holding Bitcoin were as follows:
- MicroStrategy: 628,791 BTC
- Marathon Digital Holdings, Inc.: 50,639 BTC
- Twenty One Capital (XXI) (plus merger partner Cantor Equity Partners (CEP)): 43,514 BTC
- Bitcoin Standard Hashrate Company (BSTR): 30,021 BTC
- Riot Platforms, Inc (RIOT): 19,287 BTC
Other prominent businesses listed include GameStop Corp (GME), Robinhood Markets (HOOD), Block Inc. (SQ), and Coinbase Global, Inc.
The Benefits of Investing in These Companies
Generally speaking, the share prices of Bitcoin treasury companies are highly connected with BTC. Indeed, they may grow faster than BTC in bullish markets. For example, MicroStrategy’s share price has increased by about 650% since February 1, 2024, while Bitcoin has only grown by about 160% over the same time frame.
Investors who are at ease holding a high-risk, yet well-diversified investment that offers the best benefits of both crypto and stock trading may find that these Bitcoin treasury businesses are a good fit for their holdings.
The benefits include:
- Access to cheap capital: By borrowing at rates that may be profitable even with a slight rise in the price of Bitcoin, companies can take advantage of credit facilities to expand on BTC.
- Investor interests: Based on share-price outperformance that we’ve mentioned, businesses usually attract and keep investors interested when they invest in BTC.
- Diversified growth potential: They have the opportunity to develop their money outside of traditional financial markets by keeping a portion of their treasury in Bitcoin.
- Better return potential: Because Bitcoin has historically performed better than bonds and other forms of cash, corporations find it to be even more appealing.
The Risks and Red Flags
Bitcoin proxy investing, like all other types of investing, carries risks. For example, investing in Bitcoin treasury businesses that employ leverage—such as issuing debt to acquire more Bitcoin—can magnify both gains and losses, exposing investors to greater downside risk in volatile markets. If Bitcoin’s price plummets, these firms may not be able to repay their debts or bondholders and may be compelled to sell off their BTC or, worse, declare bankruptcy, which would exacerbate losses beyond those incurred by a direct Bitcoin investment.
Other risks and red flags include:
- Extended bear markets: Sustained selling pressure and significant unrealized losses for investors may result from prolonged declines in the price of Bitcoin.
- Regulation: These businesses may be severely impacted by shifting cryptocurrency legislation, which could lead to unanticipated losses.
- Financing issues: Taking on excessive debt or leverage to buy Bitcoin could have serious repercussions for a company down the road.
- Pure speculation: These companies may be used only for speculation, creating bubble-like conditions that put your investment at risk.
- Share dilution risk: If a company keeps issuing more shares to finance additional Bitcoin purchases, it dilutes the impact of their Bitcoin holdings on your investment.
How to Evaluate a Bitcoin-Heavy Stock
If not properly managed, Bitcoin-heavy equities are susceptible to significant price swings, which can result in large losses. The first step in effectively managing your assets is doing your homework and selecting the best company. To assist you with your research, start by responding to the following questions:
1. What’s the Company’s Core Business? Is It Profitable Without Bitcoin?
Examine the core business strategy of any business before making an investment. Is this business model financially sound aside from its Bitcoin holdings? Will it still be lucrative without them? For instance, MicroStrategy is highly exposed to Bitcoin. Its earnings and losses in recent years have frequently been dependent on Bitcoin’s price fluctuations. MicroStrategy could take a bigger blow if BTC takes a hit.
2. What Percentage of Their Balance Sheet Is BTC?
A company that has a sizable chunk of its balance sheet/reserves in BTC may not be the best option for you if you’re a long-term, risk-averse investor. Pay close attention to how much of the company’s market valuation is attributable to actual business value as opposed to Bitcoin speculation. This can indicate that your holdings may significantly fluctuate during times of high BTC volatility if it is substantial.
3. Is the Stock Trading at a Premium Just Because of Bitcoin Exposure?
Comprehending a company’s fundamentals is crucial, particularly when investing in these “proxies.” Do you understand the company’s BTC plan? Are they in debt? If so, how much is it? Would the proxy be able to pay off its debts and stay in business if BTC crashed?
You must conduct in-depth research before making any investment in these businesses. Research services are abundant on the best online brokers. The best robo-advisors typically offer low-cost services for portfolio management, robust planning, easy account setup, and account services. To assist you in making well-informed decisions, use tools such as TradingView for technical analysis and Bloomberg Terminal for fundamentals. Remember to combine on-chain data and never rely on just one tool or data source; rather, combine input from these sources for a comprehensive perspective.
The Bottom Line
Bitcoin proxy investing, being less than five years old, is still an emerging method of Bitcoin investment. While it is suited to investors seeking high-risk, short-term investments in BTC, it may not align with your long-term objectives.
Manage your expectations because just because a firm owns Bitcoin does not guarantee its immunity from downturns or business failures. Purchasing Bitcoin is the best option if you desire a more direct method of cryptocurrency investment because you have the freedom to manage and monitor it yourself. Alternatively, you can invest in spot Bitcoin ETFs, which include a mix of BTC and other assets, to lower your risk even more. Always watch for BTC price movements and monitor any business you decide to invest in, as always.