US NCPPR "Rising Inflation... Companies Should Consider Holding Bitcoin"

Interview with Ethan Peck, Deputy Director of NCPPR

Impact of High Inflation

Losing Value in Cash and Bonds

Hedge with Bitcoin

"Companies holding too much cash and bonds should consider Bitcoin (BTC)"

Ethan Peck, Deputy Director of the Free Enterprise Project at the National Center for Public Policy Research (NCPPR), stated this in an interview with Blueingbit on the 5th.

NCPPR, a nonprofit conservative think tank, garnered significant attention last November and December by proposing Bitcoin reserves to Microsoft, Amazon, and Meta.

We spoke with Ethan Peck, Deputy Director of NCPPR, who plans to propose Bitcoin reserves to more companies in the future, about why he recommends holding Bitcoin.

"Cash and Bonds Losing Value... Hedge with Bitcoin"

Deputy Director Ethan Peck stated, "Protecting assets from devaluation is a corporate duty and a responsibility to shareholders," adding, "Companies with a high proportion of cash assets and bonds (government bonds, corporate bonds, etc.), regardless of industry and size, should allocate part of their assets to Bitcoin."

He pointed out that cash and bonds are losing value amid rising inflation. Peck said, "As of December last year, the four-year average U.S. Consumer Price Index (CPI) growth rate was 4.95%," adding, "Considering this, merely holding a lot of cash results in continuous corporate value decline."

He explained, "The actual inflation rate in the market far exceeds the CPI growth rate," adding, "Bond yields also fail to keep up with the actual inflation rate, contributing to the decline in corporate value."

Generally, when the CPI rises, bond yields also tend to rise. However, since the CPI does not include consumer borrowing costs (mortgage interest, credit card interest, etc.), the actual inflation rate can be up to twice the CPI growth rate.

Peck argued, "Sticking to a lot of cash and bonds in such a situation ultimately undermines corporate and shareholder value," and insisted, "Even 1% of cash and bond holdings should be used to buy Bitcoin to diversify the portfolio."

He evaluated, "Bitcoin, with a verified supply of 21 million BTC, is historically the most outstanding inflation hedge," adding, "Bitcoin prices have risen about 1200% over the past five years, significantly surpassing bond yields and inflation rates." He further stated, "Considering the cases of companies that have purchased Bitcoin, the Bitcoin reserve strategy is effective in boosting stock prices in itself."

Microsoft Opposes 'Bitcoin Reserves'... "Amazon and Meta Likely to Oppose Too"

Microsoft's board of directors recommended shareholder opposition to the Bitcoin reserve proposal, citing volatility as a critical factor in corporate finance and investment. / Photo=Microsoft Shareholders' Meeting Proxy Statement

Previously, Microsoft's board of directors expressed opposition to the Bitcoin investment proposal, citing Bitcoin's volatility as an issue. Typically, the official opinion of the board of directors significantly influences institutional investors and small shareholders, determining the passage of the agenda.

Peck predicted that Amazon and Meta's boards are also likely to reject the Bitcoin reserve proposal. He said, "Amazon and Meta will oppose the shareholder proposal like Microsoft," adding, "Generally, all companies oppose shareholder proposals." In fact, based on last year's shareholders' meeting, Amazon and Meta's boards expressed opposition to all 14 and 10 shareholder proposals, respectively.

He also mentioned that perceptions of Bitcoin reserves influence the board's judgment. He said, "Amazon officials share the same concerns about volatility as Microsoft," adding, "Even if the board believes in Bitcoin, they fear breaking industry practices."

However, Peck added, "The issue of Bitcoin's volatility will eventually be resolved," noting that the initial stock prices of companies he proposed Bitcoin reserves to were also volatile. He predicted, "Most companies tend to follow the decisions of large companies," adding, "If one company starts holding Bitcoin, other companies will naturally follow."

"Nevertheless, It's Valuable... Let's Join"

Despite the high possibility of opposition, Peck emphasized, "The Bitcoin shareholder proposal is valuable in itself." He explained that shareholder proposals can lead boards and shareholders to discuss and ponder Bitcoin, which can promote corporate Bitcoin adoption in the long term.

He cited Boeing as an example. Last May, NCPPR proposed that U.S. aircraft manufacturer Boeing conduct an audit of its diversity policy (DEI). At that time, Boeing's board officially opposed the proposal, and the vote was rejected. However, last October, Boeing withdrew its DEI policy.

Peck said, "The Bitcoin proposal is likely to lead to such outcomes," adding, "We are preparing to propose Bitcoin reserves to several other companies." He expressed confidence, "Even if the board opposes and institutional investors vote against it, they will eventually buy Bitcoin."

Finally, Peck urged shareholders to participate in Bitcoin adoption. He said, "Due to limited capacity, we could only submit a few Bitcoin proposals last year," adding, "If you are interested in submitting Bitcoin reserve shareholder proposals, please contact us. We are willing to help."