Bitcoin might become a topic of conversation among the treasury department of most American firms amid growing inflation rates. At least 47 companies have now cited the term ‘inflation’ in their earnings calls for Q1 2021.
Based on a report by financial market data provider FactSet on April 26, the figure represents the biggest number of firms to do that in the past 10 years.
Earlier this month, the US Bureau of Labor Statistics released its “Producer Price Index” report. This report showed a 4.2% year-on-year increase in PPI, which is the highest since September 2011.
The Federal Reserve chairman Jerome Powell continues to insist that the current inflation and consumer price index numbers are just temporary. But, there is a counter-argument that businesses will eventually move to transfer the burden of bigger production costs to their consumers.
In the meantime, firms may also be seeking ways to protect their cash reserves from US dollar debasement after the almost $6 trillion in stimulus money that is poured into the US economy in the course of the ongoing COVID-19 pandemic.
In August last year, MicroStrategy business intelligence firm made headlines when it announced that it had purchased Bitcoins. Currently, Michael Saylor’s firm holds more than 90,000 bitcoins valued at over $5 billion, with the asset up nearly five-fold since August 2021.
On April 26, Tesla said that it had sold $272 million worth of Bitcoin, nearly 10% of its bitcoin holdings, in the firm’s Q1 financial report. Based on Tesla’s Q1 2021 earnings call, the electric car maker netted around $101 million in net profit from the sale.
Tesla first announced its bitcoin ownership back in February 2021, saying that it has acquired nearly $1.5 billion worth of bitcoin. With inflation expected to continue in its upside trajectory at least in the near term, more American firms might change some of their cash reserves to Bitcoin. That likelihood is despite the arguments to the contrary made by the treasury experts back in February 2021.
Back in March 2021, the chief investment officer of Soros Fund Management, Dawn Fitzpatrick, said that bitcoin was no longer a fringe asset on account of the US dollar debasement.