6/27/24 Roundup: The Corporate Embrace of Bitcoin

Onramp Weekly Roundup
Written By Zack Morris

Dell Technologies

We start with the news, or cryptic set of tweets, rather, that garnered the most attention this past week. Michael Dell, CEO and founder of Dell Technologies and the world’s ~15th richest person depending on the day, with a net worth of over $100 billion, stoked speculation of a potential bitcoin treasury strategy for his company when he tweeted “Scarcity creates value” and retweeted a reply from Michael Saylor that read “Bitcoin is Digital Scarcity.”

DELL stock has been on fire this year on the back of growth in their AI-server business, and as of their latest earnings report had over $6 billion of cash on the balance sheet.

What most of the frenzy over Dell’s recent tweets missed, however, is that he is no stranger to bitcoin. Dell announced in July 2014 that his company now accepted bitcoin. A month later, he announced that the company had received a server order for 85 bitcoin, at the time $50k or $588 per coin.

Dell’s website now displays an update from October, 2017 which says “Due to low demand, Bitcoin is no longer available as a form of payment.”

Whether or not Mr. Dell intends to adopt a bitcoin treasury strategy for his company, given his adoption as early as 2014 and his recent activity on X it is reasonable to speculate that he might hold bitcoin on his personal balance sheet.

As we explored a few weeks ago in the wake of Semler Scientific adopting a bitcoin strategy, corporate treasury allocation to bitcoin remains a tricky proposition. Do shareholders want to own DELL for exposure to their booming AI-server business, and would they prefer the decision to allocate to bitcoin be left to them individually? Or would they celebrate a bitcoin treasury strategy, as they have for MicroStrategy and Semler Scientific?

One thing Dell Technologies has in common with MicroStrategy and Semler Scientific is they are controlled, or at least heavily influenced, by their founders. In the case of Dell and MicroStrategy, Michael Dell and Michael Saylor have full voting control over the company and serve as Chairman of the Board. In the case of Semler Scientific, Eric Semler serves as Chairman of the Board, and combined with fellow board member William Chang they collectively own over 20% of the company.

This is to say that, if Dell wanted to adopt a bitcoin playbook at his company, he could.

If not, he’s in the process of selling a third of his economic stake in the company for $1.3 billion, so he has plenty of personal balance sheet to play with as well.

It remains to be seen if a non-founder controlled public company will want, or be able to, adopt a bitcoin treasury strategy.

Semler Scientific

Speaking of Semler, a few weeks ago we wondered aloud about the motivation behind their new bitcoin strategy. Did they intend to use their stock and debt to conduct their own speculative attack and turn their securities into bitcoin vehicles, a la MicroStrategy? Were they simply seeking a long-term store of value for cash on hand, as they awaited the opportunity to invest in their core business?

We got some more information when a week after their original bitcoin announcement they announced the sale of $150 million of debt securities and $50 million of stock.

For now, their actions suggest it is more the former than the latter, and I wouldn’t be surprised to see them tapping the capital markets and buying more bitcoin with the proceeds going forward.

Lightspark x Nubank

That covers the hodl. Now the buidl.

While it didn’t garner as much attention as Dell’s tweets, Tuesday’s announcement from Nubank and Lightspark might prove, with time, to be the biggest bitcoin-related news of the week.

Nubank is partnering with Lightspark to bring Nu’s 100 million digital banking customers to the Bitcoin Lightning Network and Universal Money Address (UMA) standard.

UMA is like an email address but for money. It’s an open-source standard, developed by Lightspark, for sending fiat money or bitcoin over the Lightning Network to a human readable address like $me@nubank.com or $you@yourbank.com. By virtue of being an open-source protocol, banks, exchanges, or digital wallets can integrate with UMA to enable their customers to send and receive real-time money transfers to- and from- any fiat currency. For example, when sending money to a friend’s UMA in Mexico, dollars get debited from your checking account in the US and pesos get credited to their banking account in Mexico. In between, the dollars are converted to sats, sent over the Lightning Network, and converted back to fiat when they’ve reached the recipient’s UMA.

Nubank is a fast-growing digital banking platform that serves 100 million customers, primarily in remittance-heavy Brazil (85%), Mexico (15%) and Colombia (5%). If Nubank’s customers adopt UMA for remittances and peer-to-peer payments, it would result in a substantial increase in Lightning Network usage and liquidity.