No news in recent years has done more to boost Bitcoin’s careening fortunes than Elon Musk’s announcement that he’s just stashed $1.5 billion of the flagship cryptocurrency in Tesla’s corporate coffers. Musk’s daring gambit, however, mostly hasn’t inspired America’s typically cautious CFOs to follow suit. In a survey conducted in early February, Gartner Finance, a unit of leading research and advisory provider Gartner, Inc., found that ninety-five percent of the respondents have no plans to purchase Bitcoin this year. “Finance leaders who are tasked with ensuring financial stability are not prone to making speculative leaps into unknown territory,” says Alexander Bant, Gartner Finance’s chief of research.
Gartner polled finance executives, including 50 chief financial officers, at seventy-seven companies ranging in market cap from $250 million to as large as $30 billion. The survey asked the CFOs, controllers and treasurers if they planned to “hold” Bitcoin in the company coffers, this year or in the future. “Holding” Bitcoin means using it for the same reason as Musk: diversifying their cash hordes and maximizing returns on the part of their war chests not needed for everyday working capital that buys supplies and pays interest on debt. Conclusion: Only a small minority of companies are this year wagering that Bitcoin will outperform super-safe Treasuries and money overnight funds where typically park corporate cash.
On the other hand, corporate America’s curiosity about Bitcoin is growing, and a mini-trend towards following Musk may be building. Gartner conducted the survey, says Bant, because it was getting inquiries about Bitcoin from its clients. “CFOs said they were fielding questions about Bitcoin from their boards and investors, and needed to get smarter a lot quicker than they thought they did,” he says. “They asked us to provide definitions for the terms involving Bitcoin and Blockchain, so they could better explain Bitcoin’s workings.”
Bant was surprised that even 5% of the respondents said they’d be buying Bitcoin this year. “I guessed that number would come in lower,” he says. In fact, twice as many of the companies polled see Bitcoin in their future; One percent plan to start holding the coin in 2022, and other 9% said they’d take the plunge in 2024 or later.
The poll came after news broke of Musk’s $1.5 billion purchase. Bant isn’t sure whether the Tesla chief’s endorsement swelled or depressed the ranks of companies embracing Bitcoin this year or in the future. But he notes a boomlet in momentum. Corporate boards, he notes, don’t seem nearly as negative on the cryptocurrency as he predicted. Only 39% of the respondents chose potential “board risk aversion” as a reason they’re shunning the king of cryptos. “Usually, CFOs don’t want to take ‘risk’ to the board,” he says. Bant expected the CFOs to report much more skepticism at the board level. And although the sample size is small, half of the tech players polled anticipate holding Bitcoin in 2021 or the years ahead.
For Bant, the takeaway is that Bitcoin remains too volatile to win widespread adoption either as an investment, on corporate balance sheets, or as currency to pay for everything from groceries to smart phones. “We didn’t ask if companies would be adding Bitcoin to their balance sheets because they’d be selling their products for Bitcoin,” says Bant. “Even fewer would have said yes.”
To stage a big breakthrough, Bitcoin needs to emerge as digital cash for every day purchases, and so far, that’s not happening. “We’re watching closely if consumers desire to hold digital wallets and pay with digital currency,” says Bant. “Then, CFOs will have to make decisions on what they will and won’t accept.” He reckons that companies won’t take payments in Bitcoin until a new, strong regulatory framework renders transactions safe and secure. Bitcoin’s cadence of sudden spikes and swoons also makes the token extremely difficult for corporate treasuries to handle. “The volatility and cash management problems don’t sit well with CFOs, who are risk averse,” says Bant. Gigantic volumes of everyday buying and selling would smooth the waters, but it’s not clear that a group of corporate pioneers are willing to weather loads of volatility until their peers join the trend en masse.
Today, managing Bitcoin for everyday purchases would be something like managing the Argentine peso during the hyperinflation of the 1980s. In a single week in mid-July of 2019, Bitcoin dropped 12%. From February 28 to March 13 of this year, it cratered 40%. Daily swings of 4% or 5% are commonplace. Elon Musk says he’ll soon start accepting Bitcoin from folks buying Teslas. We’ll see if that audacious stroke wins any more followers than his sensational but so far little-imitated move to wager corporate cash.