Tech companies like Amazon hold significant amounts of cash—Amazon, for example, had $87 billion in reserves last year. However, currency devaluation causes this money to lose purchasing power. Bitcoin is considered by some as a solution to inflation, but is it truly worth it for companies like Amazon?

A proposal for bitcoin as a treasury option

A Washington D.C.-based policy organization, the National Center for Public Policy Research (NCPPR), has proposed that Amazon include bitcoin in its treasury. The idea is that bitcoin could serve as a hedge against inflation, preserving the value of cash reserves and shareholder equity. Still, it remains uncertain whether this strategy is compelling enough for tech giants like Amazon and Microsoft.

Microsoft has previously voted on a similar proposal, but shareholders rejected it due to bitcoin's volatility. Amazon will hold a comparable vote in May 2025. Will the outcome be different?

Differences between Amazon and Microsoft

While both Amazon and Microsoft are recognized as tech giants, they differ significantly in their approaches. Microsoft is known for its conservative strategies, whereas Amazon is renowned for its innovation and willingness to take risks. This difference might make Amazon more open to experimenting with bitcoin as a diversification tool.

Still, experts caution that a large-scale investment in bitcoin may not be realistic for a company of Amazon‘s size. A smaller allocation, akin to Tesla‘s strategy, might gain more support among shareholders.

The risks of bitcoin for Amazon

Bitcoin could help companies like Amazon safeguard their cash reserves against inflation, but the risks are considerable. Bitcoin‘s volatility and lack of tangible returns make it challenging to justify significant investments. Moreover, diverging from its current cash management strategy could be perceived by some shareholders as risky.

Additionally, Amazon requires substantial investments in its core operations, such as artificial intelligence development, cloud infrastructure (AWS), and logistical innovations. Allocating capital to bitcoin might hinder these strategic growth initiatives.

Environmental concerns as an obstacle

Another consideration for shareholders is the environmental impact of bitcoin mining, which is notorious for its high energy consumption. Amazon has committed to ambitious climate goals, such as achieving net-zero emissions by 2040. Investing in an asset associated with significant environmental impact could conflict with the company‘s sustainability objectives and generate negative publicity.

A careful decision

Amazon faces a critical decision: should it opt for bitcoin as a hedge against inflation or remain committed to its current strategy of investing in growth and innovation? While the benefits of bitcoin as a hedge are intriguing, the potential risks and impact on the company‘s reputation make this a complex choice.

Amazon shareholders will need to determine whether experimenting with bitcoin is a valuable strategic move or if adhering to proven strategies will better sustain Amazon‘s position as a leading tech giant.