Microsoft Shareholders Reject Bitcoin Proposal with Only 0.55% Support

Microsoft Shareholders Reject Bitcoin Proposal with Only 0.55% in Support

Microsoft's recent shareholder vote has shown a clear rejection of a proposal to add Bitcoin to its balance sheet.

Only 0.55% of shareholders supported the idea.

The motion, put forward by the National Center for Public Policy Research on 10 November 2024, called for the tech giant to allocate 1% of its total assets to the leading cryptocurrency, Bitcoin.

Despite the growing trend of institutional Bitcoin adoption, including by companies like MicroStrategy, Microsoft’s board firmly opposed the idea, highlighting concerns about Bitcoin's volatility.

A Dismal Response: Shareholder Rejection in the Millions

Of the 28.234 million votes cast in favour of the proposal, the overwhelming majority were against, with a staggering 5.148 billion votes voting it down.

Additionally, 22.6 million votes were abstentions.

This decisive opposition comes despite Bitcoin’s reputation as an inflation hedge, with many predicting it could provide a buffer against the eroding value of fiat currencies.

The proposal's backers saw Bitcoin as a potential safeguard, but shareholders evidently disagreed with the idea of introducing such a volatile asset to Microsoft's balance sheet.

Why Did Microsoft’s Board Oppose the Proposal?

Ahead of the vote, Microsoft’s board expressed its concerns over the risks involved.

The company explained during the shareholder meeting:

"Bitcoin is a more volatile asset, at the moment, than corporate bonds, so companies should not risk shareholder value by holding too much of it."

However, it did recognise Bitcoin as an "excellent" hedge against inflation, acknowledging that corporate bond yields are currently lower than the true inflation rate.

Despite this, Microsoft's board cautioned against too much exposure to the asset, citing the necessity for stability in corporate treasury investments.

Are Other Companies Making Moves with Bitcoin?

Microsoft’s rejection of Bitcoin contrasts with a growing trend among other corporations.

Companies like Semler Scientific have recently begun adding Bitcoin to their balance sheets, with the healthcare technology company investing $30 million into the cryptocurrency earlier this month.

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Similarly, the National Center for Public Policy has recommended Amazon convert at least 5% of its assets into Bitcoin, with a decision expected in Spring 2025.

As Microsoft continues to evaluate its options, its focus on stable investments remains a priority.

Yet, the company is not dismissing Bitcoin entirely.

The tech giant noted that it would continue to monitor trends in cryptocurrency to inform future decisions, acknowledging the asset's potential value but underlining the challenges presented by its volatility.

MicroStrategy’s Success with Bitcoin: A Contrasting Example

In stark contrast to Microsoft's cautious stance, MicroStrategy, a technology company, has made Bitcoin a key part of its corporate strategy.

The firm recently purchased an additional $1.5 billion worth of Bitcoin, bringing its total holdings to 423,650 BTC, worth roughly $42 billion.

Microsoft’s proxy statement drew attention to the fact that MicroStrategy’s stock has outperformed Microsoft's by a massive 313% this year, despite its smaller scale of operations.

The company noted:

“MicroStrategy—which, like Microsoft, is a technology company, but unlike Microsoft, holds Bitcoin on its balance sheet—has had its stock outperform Microsoft stock this year by 313% despite doing only a fraction of the business that Microsoft has. And they’re not alone.”

Will Microsoft’s Caution Affect Its Future Strategy?

Despite the overwhelming rejection of the Bitcoin proposal, Microsoft has made it clear that it is not dismissing cryptocurrency investments altogether.

The company’s Global Treasury and Investment Services team continues to monitor developments in the crypto market to inform its future decisions.

Microsoft explained:

“As the proposal itself notes, volatility is a factor to consider in evaluating cryptocurrency investments for corporate treasury applications that require stable and predictable investments to ensure liquidity and operational funding.”

With Bitcoin’s value still sitting steadily above $100,000 per coin, the debate surrounding its role in corporate treasuries is likely to continue.

As more companies embrace Bitcoin, Microsoft will need to assess whether its cautious approach might eventually need to evolve.