Microsoft, the third-largest company in the world by market capitalisation, holds $523bn in total assets.

If just 1% of its balance sheet were allocated to bitcoin, the move would drive significant demand for the cryptocurrency. Such an endorsement would spur broader adoption and potentially push the price of bitcoin past its key resistance level of $100,000.

The NCPPR proposal

The proposal was submitted by the National Center for Public Policy Research (NCPPR), a conservative US think tank. A favourable vote would not mean immediate bitcoin purchases, instead, it would compel Microsoft’s board to conduct an assessment to determine if diversifying its balance sheet with bitcoin is in the long-term interests of shareholders.

In its supporting statement, the NCPPR argues that during consistent inflation, a company’s success is judged not only by how well it conducts business but also by how well it stores profits. According to the Consumer Price Index (CPI), the inflation rate in the US averaged 5% over the past four years. A measure that the NCPPR criticises as poor and corrupt, suggesting that the true inflation rate could be significantly higher. Therefore, corporations have a fiduciary duty to protect profits from debasement in addition to increasing profits.

The NCPPR goes on to argue that Microsoft is failing to protect its assets from debasement, the majority of which is invested in US government securities and corporate bonds. The NCPPR claims “Bitcoin is an excellent, if not the best, hedge against inflation” while acknowledging the volatility of the asset. They suggest companies, at a minimum, evaluate the benefits of allocating just 1% of their assets into bitcoin.

Microsoft’s stance

Microsoft’s board recommends a vote against the proposal. They state that an assessment of bitcoin is unnecessary because Microsoft’s management has already carefully considered the topic. They also argue that corporate treasuries require stable and predictable investments to ensure liquidity and operational funding.

After NCPPR’s proposal was made public Executive Chairman of MicroStrategy, Michael Saylor , posted on X offering to discuss the matter with Microsoft’s CEO, Satya Nadella.

In 2020, MicroStrategy became the first publicly traded company to adopt bitcoin as its primary reserve asset. The company has since accumulated more than 402,000 bitcoins (worth more than $38bn) and has plans to raise a further $42bn over the next three years to buy more. The NCPPR cited MicroStrategy as a successful case study of Bitcoin adoption.