Coinbase Considers Aggressive Bitcoin Strategy but Abandons Plan Due to Risks
Coinbase, the largest cryptocurrency exchange in the United States, announced that it had previously considered the aggressive Bitcoin buying strategy adopted by MicroStrategy founder Michael Saylor, but abandoned the plan due to risks.
“We’ve considered several times over the last 12 years whether we should invest 80% of our balance sheet in Bitcoin,” Coinbase CEO and co-founder Brian Armstrong said in a video speech on social media platform X. But that strategy could have seriously jeopardized the company’s cash position and potentially sent Coinbase into bankruptcy, Armstrong said. “We made a conscious choice to take the risk,” Armstrong said.
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Although Coinbase has abandoned that strategy, the company added $153 million in cryptocurrencies, mostly Bitcoin, to its investment portfolio in the last quarter. According to Coinbase’s latest shareholder letter, the company holds $1.3 billion in cryptocurrencies.
Speaking in the same broadcast on the X platform, Coinbase Chief Financial Officer Alesia Haas stated that they do not want to compete with their customers. “We will not stop at this point,” Haas said, adding that the company will continue to increase its crypto assets.
On the other hand, many companies have started to follow similar strategies, following Saylor’s model of financing Bitcoin investments through equity and debt sales. MicroStrategy’s shares have gained more than 3,000% since it began buying Bitcoin in 2020. The company holds approximately $54 billion worth of Bitcoin.
*This is not investment advice.