Accumulating bitcoin a risky digital rush by companies?
Who also invests?
Companies frequently own bitcoin -- the largest cryptocurrency by market capitalisation -- to take part in sector activities such as "mining", which refers to the process of validating transactions in exchange for digital tokens.
Tesla has previously accepted payments in bitcoin, while Trump Media soon plans to offer crypto investment products.
Other players who had core operations totally unrelated to cryptocurrency, such as Japanese hotel business MetaPlanet, have switched to buying bitcoin.
US firm Strategy, initially a seller of software under the name MicroStrategy, holds more than three percent of all bitcoin tokens, or over 600,000.
Its co-founder Michael Saylor "created real value for its original set of investors" by offering the opportunity to invest in shares linked to cryptocurrencies, Andy Constan, chief executive of financial analysts Damped Spring Advisors, told AFP.
This was five years ago when other financial products allowing investment in cryptocurrencies, without a need to directly own tokens, were not permitted.
Why invest?
Companies collect bitcoins "to diversify" their cash flow and "counter the effects of inflation", said Eric Benoist, a tech and data research expert for Natixis bank.
Some struggling companies are riding the trend in a bid to "restore their image" by "backing themselves with an asset perceived as solid and one that appreciates over time", he added.
Strategy's current focus is on accumulating bitcoin, simply to attract investors interested in the currency's potential.
Bitcoin can also have a simple practical use, as in the case of the Coinbase exchange, which uses its own reserves as collateral for its users.
The risks?
Bitcoin's value has soared around ninefold in five years, fuelled recently by US regulatory changes under Trump, a strong backer of the crypto sector.
However, the unit's volatility is four times greater than that of the main US stock index, the S&P 500, according to Campbell Harvey, a professor of finance at Duke University in the United States.
Harvey warns against using a company's cash reserves, "their safe haven", to buy crypto.
Bitcoin's price, currently around $117,000, has in recent years been boosted by large holders of cryptocurrency, referred to as "whales".
Harvey argues that in the case of "major buyer" Strategy, liquidating all their 600,000 bitcoin tokens is no simple task owing to the high value.
"Assuming that you could liquidate all of those bitcoin at the market price is a heroic assumption," he told AFP, adding such a deal would see the cryptocurrency's price plummet.
Jack Mallers, chief executive and co-founder of bitcoin-focused company Twenty One Capital, said his business embraced the sector's volatility, adding the market would need to be flooded for the token's price to crash.
A bubble?
According to its own calculation, Strategy's stock is selling at about 70 percent above the value of its bitcoin reserves.
The company -- which did not answer AFP's request for comment -- is growing thanks to bitcoin purchases, which in turn is attracting investors and pushing up its share price.
But ultimately it will need to monetise these crypto assets, for example by linking them to financial products, for its business to be sustained.
Should Strategy and other so-called "bitcoin treasury funds" fail to do so, Benoist fears the crypto investment bubble will burst.
He points out that the strategy of accumulation runs counter to the original philosophy of bitcoin, which was conceived in 2008 as a decentralised means of payment.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
France 24
5 hours ago
- France 24
Asian markets waver to start key week for trade, US data
Observers expect Donald Trump to announce an extension of a trade war truce reached with China last month, ahead of a 90-day deadline due to expire Tuesday. Meanwhile, a key US consumer price index report is set up for Tuesday and could shape future policy decisions by the Federal Reserve, which has come under increasing pressure from the president to cut rates. Investors have ramped up their bets on the central bank lowering borrowing costs at its next meeting in September following a series of reports -- particularly on jobs -- indicating the world's number one economy was slowing. Also in view is a high-stakes summit between Trump and Russian counterpart Vladimir Putin on Friday in Alaska, which could pave the way for a deal to resolve the Ukraine war that involves an easing of tough sanctions on Moscow. In early trade, Hong Kong, Shanghai, Sydney, Seoul, Wellington, Taipei and Jakarta all rose though there were losses in Singapore and Manila. Tokyo was closed for a public holiday. With Tuesday's US-China tariff truce deadline looming, investors are bullish about the prospects of another extension. "The market has fully subscribed to the high probability of the tariff truce being rolled over for another 90 days" said Chris Weston of Pepperstone. "As such, unless diplomatic talks fully break down, news of extension shouldn't move markets too intently," he added. Gold futures edged down after hitting a record high Friday following reports of an unexpected tariff on the precious metal. Despite protracted uncertainty about trade, investors remain optimistic about artificial intelligence -- an area of fierce competition between Beijing and Washington. Reports Monday said that US chip giants Nvidia and Advanced Micro Devices (AMD) had agreed to pay Washington 15 percent of their revenue from selling AI chips to China. Investors are betting that AI will transform the global economy, and last month Nvidia -- the world's leading semiconductor producer -- became the first company ever to hit $4 trillion in market value. Key figures at 0300 GMT Hong Kong - Hang Seng Index: UP 0.2 percent at 24,896.02 Shanghai - Composite: UP 0.3 percent at 3,644.73 Tokyo - Nikkei 225: Closed for a holiday Pound/dollar: UP at $1.3457 from $1.3451 on Friday Euro/dollar: UP at $1.1667 from $1.1643 Dollar/yen: DOWN at 147.56 yen from 147.79 yen Euro/pound: UP at 86.70 pence from 86.54 pence
Sustainability Times
2 days ago
- Sustainability Times
"NASA Just Armed A Rocket On Mars": Historic First Launch Set To Blast Off From Red Planet's Surface For Return To Earth
IN A NUTSHELL 🚀 Northrop Grumman's successful engine test is a pivotal step for launching rockets from Mars . . 🔍 The Mars Ascent Vehicle aims to return the first samples from the red planet to Earth. aims to return the first samples from the red planet to Earth. 🌌 Coordinating international missions, the project requires perfect synchronization to retrieve and return Martian samples. samples. 💰 Budget overruns and political debates pose challenges to the mission's financial future. In a groundbreaking development, Northrop Grumman's laboratories in Maryland recently witnessed the third successful test of a rocket engine designed for an unprecedented mission. This engine is not just an ordinary piece of technology; it signals a revolutionary shift in space exploration. The engine is intended for a task never before attempted by humanity: launching an orbital rocket from the surface of another planet. This ambitious endeavor aims to bring back the first authentic samples from Mars to Earth, a mission that could reshape our understanding of the red planet and our place in the universe. A Technological Marvel Creating a rocket capable of launching from Mars is a monumental technological challenge. The Mars Ascent Vehicle (MAV) is designed to achieve this feat. Standing at just 10 feet tall and weighing approximately 990 pounds, the MAV must function flawlessly after enduring a months-long journey through space and years of waiting in Mars' harsh environment. It must then reach Mars orbit with surgical precision. The MAV represents a leap in engineering, as it must perform its mission in an environment where every ounce counts, and any failure could jeopardize decades of effort. Unlike terrestrial rockets, the MAV must operate under conditions where even slight miscalculations can lead to mission failure. The success of this mission could pave the way for future endeavors to retrieve samples from other celestial bodies. The Quest for Martian Treasures This technical achievement is part of one of the most ambitious missions ever conceived: returning the first genuine samples from Mars to Earth. The Perseverance rover is currently traversing the Martian landscape, meticulously collecting rock and soil fragments with its advanced drilling system. These samples are carefully stored in sealed containers, creating a planetary treasure map. Treehoppers' Strange Bodies Could Sense Static Charges, Sparking Outrage: 'These Weird Insect Shapes Are Actually Electric Field Detectors' Scientists Claim The collected samples will await the arrival of a second, more specialized rover. This future mission will gather the samples and prepare them for the journey back to Earth. The significance of these samples lies in their potential to provide unprecedented insights into Mars' geological history and the possibility of past life on the planet. A Complex Space Ballet The sequence of events following the sample collection requires intricate coordination. Once the samples are secured in a special container, the MAV will spring into action. Within minutes, it must accelerate its valuable cargo to speeds of nearly 9,000 miles per hour, sufficient to escape Mars' gravitational pull and reach orbit. In orbit, an automated spacecraft will rendezvous with the MAV to retrieve the sample container and embark on the long journey back to Earth. This complex choreography requires perfect synchronization among multiple international missions, presenting logistical challenges that surpass any previous space endeavors. The mission's success hinges on seamless collaboration across nations and agencies. '27 Million Tons of Plastic Are Destroying the North Atlantic' Reveals Shocking New Study Showing Unseen Ocean Crisis Innovation in Every Detail Recent tests conducted by Northrop Grumman have revealed fascinating innovations. The engine utilizes an advanced composite propellant, likely based on ammonium perchlorate mixed with powdered aluminum and resilient polymers. This formulation, derived from the company's proven STAR motors, must withstand Mars' extreme temperatures while adhering to strict planetary protection standards. An intriguing detail emerged during testing: the rocket rapidly rotated during combustion. This rotation indicates the MAV will use gyroscopic stabilization, a proven technique to maintain precise trajectory without complex guidance systems. This innovation highlights the meticulous attention to detail required to ensure mission success. The Dawn of a New Era Beyond the technical feat, this mission marks a significant conceptual shift. For the first time in the history of space exploration, we are not just sending robots to observe and analyze on-site; we are bringing back physical fragments of another world to our terrestrial laboratories. Jeff Bemis, program manager at Northrop Grumman, expressed confidence in the project: 'We have demonstrated a flight-ready design.' This statement underscores the promise of a new era in space exploration, one that redefines our relationship with the cosmos. '86,000 Hidden Earthquakes Uncovered Beneath Yellowstone' Reveals AI Breakthrough That Changes Everything About Volcanic Risk Budgetary Clouds on the Horizon Despite the technical optimism, a significant uncertainty looms over the project's financial future. Initially estimated to cost several billion dollars, the Mars Sample Return (MSR) mission faces substantial budget overruns, raising concerns in the U.S. Congress. The astronomical costs of this international collaboration have sparked heated debates over space priorities. This budgetary pressure creates a frustrating paradox: while engineering advancements, such as the successful MAV tests, continue to progress, political uncertainty threatens to jeopardize one of the decade's most promising missions. The race against time now involves not only technological prowess but also the political will to fully fund this Martian dream. The MAV project and its associated missions underscore the complexity and ambition of modern space exploration. As we stand on the brink of a new era, the success of these missions will depend on overcoming technical challenges and securing the financial and political support necessary to bring Martian samples back to Earth. What innovative solutions and collaborative efforts will emerge as we strive to unlock the secrets of the red planet? This article is based on verified sources and supported by editorial technologies. Did you like it? 4.5/5 (30)
France 24
2 days ago
- France 24
Explosion kills several members of army in southern Lebanon
01:57 09/08/2025 Gaza journalist reacts to Israel's military expansion plan 09/08/2025 Japan: Nagasaki marks 80th anniversary of US atomic bomb attack 09/08/2025 Los Angeles: Firefighters make progress against blaze that forced thousands to flee 09/08/2025 US, Russian leaders set for talks on Ukraine peace deal 09/08/2025 Putin-Trump summit: Zelensky warns against 'decisions without Ukraine' 09/08/2025 War in Ukraine: Trump flags 'swapping of territories' ahead of Alaska talks 09/08/2025 Ghana builds Africa first genetic database to tackle cancer research gap 09/08/2025 Nagasaki survivors say 'never again' 09/08/2025 US astronaut Jim Lovell, commander of Apollo 13, dead at 97
