- Companies with exposure to Bitcoin have seen their share prices correlate Bitcoin’s performance
- Tesla, Argo Blockchain, and MicroStrategy have seen their share price follow the ups and downs of the past nine months
- The fluctuation highlights the downside of having Bitcoin exposure, at least in the short term
Bitcoin’s recent correction hasn’t just hit the crypto world – traditional companies with exposure to Bitcoin have also suffered in recent weeks. MicroStrategy, Argo Blockchain, and Tesla are just three examples of institutional bitcoin holders who have all suffered as Bitcoin has fallen from its mid-april top of $65,000 to as low as $30,000 as the pitfalls of owning so much of the notoriously volatile asset start to make themselves realized.
Bitcoin Drop Echoed in Share Prices
As we can see from the below three charts, the share price of the three companies peaked in February when Bitcoin was hitting consecutive highs and then once again in april when it hit $65,000:
What’s also evident is that, following that February high and April bounce, the share prices have declined sharply – Tesla has lost 24% and Argo 48%, while MicroStrategy’s share price has dropped by a similarly worrisome 46%.
MicroStrategy Has Most to Fear
MicroStrategy has famously spent several billions of dollars on bitcoin in the past nine months, and currently has exposure to over 91,500. In terms of pure exposure they are at most risk, and a recent interview with Michael Saylor showed him more fraught than we have ever seen him in public, which is hardly surprising considering the hit that his balance sheet has just taken:
— Vandelay ₿TC Industries (@Karalhoin) May 18, 2021
Tesla Holding Firm…Apparently
Tesla bought their bitcoin in one hit earlier in the year, with CEO Elon Musk famously treating the crypto world as his plaything and being heavily responsible for its recent swings, both to the positive and the negative. Speculation is still rife that Tesla sold their bitcoin holdings during the upsurge, although a tweet from Musk on what is being dubbed Black Wednesday suggested that Tesla was still holding firm:
Tesla has 💎 🙌
— Elon Musk (@elonmusk) May 19, 2021
Argo Blockchain Looking to the Future
British Bitcoin mining firm Argo Blockchain, who recently announced huge expansion in the U.S., has more exposure to the Bitcoin price due to the fact that as a miner it’s income has taken a huge hit. With pressure mounting over the impact of Bitcoin mining on the environment, Argo has taken steps to show its support for a greener Bitcoin by signing up to the Crypto Climate Accord which aims to achieve net-zero emissions from electricity consumption by 2030.
This may not be enough to remedy the short term impact of the share price but with the company planning for decades rather than years or months, the situation should be reversed in time. Indeed, all three companies should be ignoring such price swings, and even the next bear market, and should focus on where Bitcoin will be in another ten years.