Why Tech Giants Like Amazon Might Be Hesitant to Adopt Bitcoin

Author: Daniel Ramirez-Escudero, CoinTelegraph; Compiler: Deng Tong, Golden Finance

Big tech companies like Amazon have a lot of cash on hand - $87 billion last year - which is losing purchasing power.

The National Center for Public Policy Research (NCPPR), a Washington, D.C.-based think tank, has submitted a shareholder proposal to adopt Bitcoin as a solution. However, whether the tech giants will benefit from it remains unclear.

NCPPR has been pushing this strategy at Microsoft and Amazon. In both cases, the think tank believes that including Bitcoin in its vaults will protect cash assets and shareholder value from inflation.

The proposal argues that the Consumer Price Index (CPI), which puts inflation at 4.95%, is a "very poor indicator" of real currency depreciation and suggests that actual inflation could be twice as high.

Cash on hand at Microsoft and Amazon from 1996 to 2024. Source: Companiesmarketcap

Microsoft has $78 billion in cash on hand, while Amazon has $87 billion. While Bitcoin could offer a potential hedge, does the risk outweigh the benefits?

Despite support from Orange Pill expert Michael Saylor, chairman of business intelligence firm MicroStrategy, Microsoft shareholders overwhelmingly voted against the NCPPR's Bitcoin reserve proposal, indicating that its alleged volatility is a negative factor.

Amazon will make its decision next. Will this vote be different?

Amazon is not a conservative tech company, unlike Microsoft

Nick Cowan, CEO of fintech firm Valereum, noted that Microsoft and Amazon may have similarities as tech giants, but their styles are very different.

“Amazon’s shareholder vote may indeed differ from Microsoft’s due to Amazon’s reputation for innovation and risk tolerance.”

While Microsoft has historically been conservative in its financial and strategic approach, Amazon has a strong track record of adopting emerging technologies and exploring novel investments.

“Unlike Microsoft, Amazon’s higher appetite for innovation may align with Bitcoin’s diversification potential,” Cowen said.

Amazon is likely to vote on the NCPPR proposal at its annual shareholder meeting in May 2025. The proposal urges the company to allocate more than the typical 1-2% of its corporate portfolio to risky assets.

"At a minimum, Amazon should evaluate the merits of holding a portion of its assets, even just 5%, in Bitcoin."

Cowen believes that this proportion is unlikely. "For a company of Amazon's size, allocating 5% to Bitcoin is ambitious and probably unrealistic," he said. "While Bitcoin provides diversification, its volatility and lack of tangible benefits make it challenging to justify at such a level." He believes that "a smaller experimental allocation similar to Tesla's approach may gain more shareholder support."

Tesla's purchase of Bitcoin in 2021 has brought significant profits to the company. Initially, Tesla purchased $1.5 billion worth of Bitcoin, but sold 70% of its initial position.

Despite this, according to data from BitcoinTreasuries.NET, Tesla still holds its Bitcoin reserves (9,720 BTC), which are worth more than $1.3 trillion.

Amazon has billions of dollars in available cash, so it could easily allocate a similar amount to Tesla.

While the NCPPR may sincerely want Amazon and Microsoft to adopt Bitcoin, Cowan said the broader strategy is to amplify the message that Bitcoin can be seen as an inflation hedge to "create potential momentum for institutional acceptance of Bitcoin."

Do Tech Giants Need Bitcoin for Their Treasury?

MicroStrategy has made significant progress on its path to incorporating Bitcoin into its financial core strategy.

The company began buying Bitcoin on August 12. On December 11, 2020, it acquired 21.454 BTC for $250 million. Since then, its stock price has soared from $14 to $411, and its market value has risen from $1.3 billion to nearly $100 billion.

Michael Saylor's bet on using Bitcoin as an inflation hedge far exceeded expectations, so why aren't tech giants following Saylor's financial model?

However, MicroStrategy's approach is significantly different, using a lot of leverage, making its strategy riskier than Tesla's buy-and-hold approach.

MicroStrategy's market capitalization history from 1998 to 2024. Source: Companiesmarketcap

In addition, the ratio of Bitcoin to its total market capitalization turns its stock into a leveraged Bitcoin proxy.

According to the article, Amazon's market capitalization is $2.4 trillion and Microsoft's is $3.3 trillion, so its Bitcoin adoption effect is different from MicroStrategy.

Cowen believes Amazon is in no rush to adopt Bitcoin because its "core business is strong." While reallocating some or all of its cash reserves to Bitcoin could hedge against inflation, there are risks in deviating from its current financial strategy, which some shareholders may see as a potential liability to its profitable business model.

"The opportunity cost of holding a volatile asset like Bitcoin instead of investing in research and development or acquisitions would have a significant impact on this decision."

"Putting a large portion of funds into Bitcoin could impact Amazon's ability to fund key growth areas such as AWS, advances in artificial intelligence, and logistics infrastructure," he said. The shareholder vote would need to "balance speculative asset acquisitions with key innovation investments that define Amazon's competitive advantage."

Bitcoin’s reputation issues could hold back shareholders

Big tech companies also have to consider public perception, as mainstream media has a strong influence on their brands and stock prices. While Bitcoin’s reputation has greatly improved, it is still associated with speculative trading assets, potential abuses and environmental issues.

“A negative PR narrative could obscure potential economic benefits, especially given Amazon’s focus on ESG initiatives and its need to maintain broad appeal among stakeholders.”

Amazon revolutionized the business model by delivering goods to customers’ doorsteps quickly. However, the environmental impact of this model is staggering, generating more than 709 million pounds of plastic waste, according to a 2022 report by environmental group Oceana.

The company has pledged to achieve net zero carbon emissions by 2040, a decade ahead of the goals of the Paris Agreement.

Bitcoin’s high energy consumption during mining has been heavily criticized by environmentalists. However, things are changing as mining infrastructure is more thoroughly examined. Despite this shift, the risk of a PR backlash remains.

Amazon shareholders must decide whether the company can achieve similar positive results as Tesla or MicroStrategy by using Bitcoin to hedge against inflation, or whether it should avoid risk and focus on its core business model.