Original title: "Why tech giants like Amazon may hesitate to adopt Bitcoin"

Written by: DANIEL RAMIREZ- ESCUDERO

Compiled by: Lawrence, Mars Finance

Big technology companies have a lot of cash on hand. Currency depreciation causes them to lose purchasing power. Is Bitcoin the financial solution to fighting inflation? Amazon is next to decide.

Big tech companies like Amazon have a lot of cash on hand ($87 billion last year). But as currencies depreciate, the purchasing power of that cash is declining.

Washington, D.C. think tank the Center for Public Research (NCPPR) has submitted a proposal to shareholders to adopt Bitcoin as a solution. However, it's unclear whether tech giants will benefit from this.

NCPPR has been pursuing this strategy at Microsoft and Amazon. In both companies, the think tank believes that incorporating Bitcoin into its funds will protect cash assets and shareholder value from the effects of inflation.

The proposal considers the consumer price index (CPI) to control inflation at 4.95%, which is an "extremely poor indicator" of real currency depreciation. and suggests that actual inflation may be twice that amount.

Cash reserves of Microsoft and Amazon, 1996 to 2024. Source: Companiesmarketcap

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

Despite the help of Michael, an orange pill expert and chairman of business intelligence company MicroStrategySupported by Saylor, Microsoft shareholders still voted overwhelmingly to reject the NCPPR’s Bitcoin reserve proposal, indicating that its alleged volatility is a negative factor.

Next is Amazon. Will this vote be different?

Amazon is not as conservative a technology company as Microsoft

Nick Cowan, CEO of financial technology company Valereum, told Cointelegraph that Microsoft and Amazon as technology companies The giants may have similarities, but their styles are very different.

"Amazon's shareholder vote may indeed differ from Microsoft's because of its reputation for innovation and risk-taking."

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

Cowan said: "Unlike Microsoft, Amazon's higher willingness to innovate may be consistent with Bitcoin's diversification potential."

Amazon may vote on the NCPPR proposal at its annual shareholder meeting in May 2025. The proposal urges the company to allocate more to risky assets in the company's portfolio than the usual 1-2%.

"Amazon should at least evaluate the benefits of holding some (even just 5%) of its Bitcoin assets."

Cowan believes this ratio is unlikely to be achieved. “For a company of Amazon’s size, a 5% allocation to Bitcoin is ambitious and probably unrealistic,” he said. “While Bitcoin provides diversification, its volatility and lack of tangible returns make it difficult to justify at this level.” He believes that “smaller-scale experimental allocations similar to Tesla’s approach may be Gaining more shareholder support. ”

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

However, according to data from BitcoinTreasuries.NET, especiallySLA still holds its Bitcoin reserves (9,720 BTC), which are worth over $1.3 billion.

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

While NCPPR may sincerely hope that Amazon and Microsoft will adopt Bitcoin, Cowen believes that the broader strategy is to expand Bitcoin can be regarded as an inflation hedge information to “create potential momentum for institutional acceptance of Bitcoin.”

NCPPR did not immediately respond to Cointelegraph’s request for comment.

Do technology giants need Bitcoin to enrich their wealth?

MicroStrategy has achieved significant results in integrating Bitcoin into the core of its financial strategy.

The company began buying Bitcoin on August 11, 2020, acquiring 21,454 BTC for $250 million. Since then, its shares have surged from $14 to $411, and its market value has risen from $1.3 billion to nearly $100 billion.

Michael Thaler's bet on Bitcoin as a hedge against inflation paid off far better than expected, so why aren't tech giants following Thaler's financial model? ?

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

MicroStrategy market cap history from 1998 to 2024. Source: Companiesmarketcap

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

According to the article, Amazon has a market capitalization of $2.4 trillion and Microsoft has a market capitalization of $3.3 trillion, so its Bitcoin adoption effect will not be similar to that of MicroStrategy .

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

"The opportunity cost of holding a volatile asset like Bitcoin rather than investing in R&D or acquisitions will weigh heavily in such a decision."

He said: "Having the majority of funds in Bitcoin may affect Amazon's ability to The ability to fund key growth areas such as AWS, artificial intelligence development, and logistics infrastructure.” Shareholders voted to “balance speculative asset acquisitions with investments in key innovations that determine Amazon’s competitive advantage.”

Bitcoin. Environmental concerns may hinder shareholders

Big tech companies must also 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 abuse, and environmental concerns.

"A negative PR narrative may obscure potential financial benefits, especially given Amazon's focus on ESG initiatives and its need to remain broadly relevant to stakeholders Appeal. ”

Amazon has revolutionized commerce by delivering goods to your door quickly. However, the impact of this model on the environment is staggering, producing more than 709 million pounds of plastic waste, according to a 2022 report by environmental group Oceana.

The company has committed to achieving net-zero carbon emissions by 2040, ten years ahead of the Paris Agreement target.

Bitcoin mining’s high energy consumption has been severely criticized by environmentalists. However, this narrative is changing as mining infrastructure comes under more thorough scrutiny. Despite this shift, the risk of a PR backlash remains.

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