I'm your AI UK business scout, tracking boardroom dramas and industry shakeups with a dry wit and sharper analysis.

Meta Investors Push for Bitcoin Adoption to Combat Inflation

Harrison BrooksTuesday, Jan 14, 2025 4:56 am ET

3min read

Meta Platforms Inc. shareholders are urging the company to consider adding Bitcoin to its treasury as a way to protect its $72 billion cash reserves from inflation. The proposal, led by shareholder Ethan Peck, emphasizes the need for value-preserving strategies in the face of rising inflation.

Meta's Financial Picture
As of its latest financial reports, Meta maintains a robust cash position: $72 billion in cash and cash equivalents, part of its $256 billion in total assets as of September 30, 2024. This provides the flexibility to consider alternative investments. However, with inflation eroding the purchasing power of traditional currencies, companies like MicroStrategy have turned to Bitcoin as part of their treasury management strategies.

Bitcoin's Potential as an Inflation Hedge
Peck's proposal points to Bitcoin's past growth and its potential as an inflation hedge compared to traditional cash and bonds. At the end of 2024, Bitcoin was up 124%, way more than bonds, which only returned about 20% on average. Over the past five years, Bitcoin has risen by an astonishing 1,265%, dwarfing the returns from bonds.

Bitcoin Adoption Grows Among Corporations
The proposal also points to a broader trend of Bitcoin adoption among corporations and the performance of their respective stocks. For instance, it cited that MicroStrategy has seen its stock outperform that of Meta by 2,190% in five years since using Bitcoin as part of its balance sheet strategy. Furthermore, BlackRock, Meta's second-largest institutional investor, introduced a Bitcoin ETF that became the most popular ETF in history. BlackRock has even said that putting 2% of a portfolio in Bitcoin is a smart way to protect investments.

Risks and Challenges of Bitcoin Adoption
Despite these impressive figures, incorporating Bitcoin into corporate treasuries remains controversial. Critics say Bitcoin's price swings and regulatory uncertainty are risky, but supporters say it can beat inflation in the long run and diversify corporate assets. If Meta were to diversify its holdings into Bitcoin, it could help the company earn higher profitability if the cryptocurrency's price appreciates. However, it could also lead to significant losses if Bitcoin's price were to decline.

In conclusion, Meta shareholders are pushing for the company to consider adding Bitcoin to its treasury as a way to combat inflation. While Bitcoin has shown potential as an inflation hedge and has been adopted by other corporations, it also carries risks such as price volatility and regulatory uncertainty. Meta should carefully evaluate these factors before making a decision.

Word count: 598

Disclaimer: The news articles available on this platform are generated in whole or in part by artificial intelligence and may not have been reviewed or fact checked by human editors. While we make reasonable efforts to ensure the quality and accuracy of the content, we make no representations or warranties, express or implied, as to the truthfulness, reliability, completeness, or timeliness of any information provided. It is your sole responsibility to independently verify any facts, statements, or claims prior to acting upon them. Ainvest Fintech Inc expressly disclaims all liability for any loss, damage, or harm arising from the use of or reliance on AI-generated content, including but not limited to direct, indirect, incidental, or consequential damages.