Andy Mukherjee: Would bitcoin's pixie-dust math work on Dalal Street?

Copyright © HT Digital Streams Limited All rights reserved. Michael Saylor, executive chairman and co-founder of Strategy. Photo: Reuters Summary Such is the hype around bitcoin that investors were willing to pay $2 for $1 worth of the cryptocurrency for shares of MicroStrategy, a so-called ‘bitcoin treasury company’. An Indian company’s attempt to imitate it was shot down. Is this a good thing? Here’s a math problem for you: suppose you buy ₹100 worth of gold and store it in a jar. What is the immediate value of the pot? That is ₹100, assuming no wild price swings in gold. But suppose you buy ₹100 worth of bitcoin and store it in a digital wallet. What is the value of that wallet? For a long time, the answer, at least according to Wall Street, was ₹200. How? Through the magic of something called bitcoin treasury companies, the biggest example of which is Strategy Inc (formerly MicroStrategy). MicroStrategy started as a software services company in 1989, but in 2020 turned to buying bitcoin. It funded its purchases primarily by issuing new shares, convertible bonds, etc., and is today the largest private holder of the cryptocurrency. This strategy worked wonders for the company – its market cap was roughly double its bitcoin stake for the majority of the post-covid bull market. There is no plausible explanation of exactly why this was so. Yes, the company was one of the early backers of the hottest digital asset of the 21st century, led by famous bitcoin bull Michael Saylor, and offered a convenient way for investors to indirectly own the cryptocurrency by buying its shares (before the US Securities and Exchange Commission allowed it to track bitcoin ETFs), but whether it justified all that Paying Wall Street to pay $200 for a $100 financial future. on. Even as of January 2025, MicroStrategy owned about $49 billion worth of bitcoin, but had a market cap of $94 billion. However, this spread began to narrow at the beginning of this year. Currently, MicroStrategy’s 640,250 bitcoins are worth about $74 billion, while its market capitalization stands at $87 billion. The market still pays more, but not a 100% premium. Indian twist Would something like this work in Dalal Street? BSE last month rejected an application by IT training firm Jetking Infotrain to list its preference shares issued to buy virtual digital assets (VDAs), mainly bitcoin. In May, the company’s board approved the allotment of nearly 400,000 shares on a preference basis at ₹154 per share, totaling over ₹6 crore, after receiving in-principle approval from BSE. Interestingly, the company already held 15.02 bitcoins on its balance sheet as of March 31, 2025. After the preference issue, this increased to 21. However, in a letter dated September 24, BSE returned its application to list the preference shares. The letter read: “… please note that the purpose of the issuance includes investment in the virtual digital assets which may be speculative in nature. “Furthermore, please note that, in the context of a recent issuance, policy on investment in virtual digital assets is being reviewed and until final view emerges, we will not be able to process the applications of this nature. Accordingly, the application submitted by the company seeking listing approval for its proposed preference issue is returned.” On October 10, the company said it had moved the Securities Appellate Tribunal (SAT) against BSE’s decision. “The genesis of the case lies in the fact that the respondent himself, despite being well aware of the purpose for which such proceeds would be granted an appeal on May 29, May 29, 2009. But withdrawn from its position under the Appellant raising funds and investing in VDAs,” the company wrote in a stock exchange filing. This is the first time a listed Indian company has publicly pursued its bitcoin strategy in the country’s tangled regulatory landscape. Defying gravity and gravitas There is something about bitcoin that always leans towards the extraordinary. features of both a safe haven and a meme share. While everyone is going ga-ga about gold and silver, bitcoin has outperformed them both. And yet even a flicker of bad news can trigger a violent sell-off, as seen last week after Trump’s latest salvo of tariffs against China. A $2.3 trillion market cap token that acts like a bouncy microcap share. Now how do you deal with it? Once a run-of-the-mill novelty designed to appeal to basement dwellers and secretive criminals, bitcoin is now increasingly seen as ‘digital gold’ for the 21st century, although it retains its legions of critics. From a domestic perspective, investors face two major dilemmas. The first is regulatory gray areas, whereby cryptocurrencies are effectively recognized as taxable assets but denied legal tender status. And second is the heavy burden of flat 30% tax (plus surcharge and cess) on profits and a 1% tax deducted at source if the total value of transactions during a fiscal year exceeds a certain threshold. And of course, wild price swings and a propensity to attract hackers are simply occupational hazards of crypto investment. All this means that the decision to invest in bitcoin requires some serious mental mathematical gymnastics – perhaps appropriate for an asset that refuses to obey the laws of mathematics. The author is a Bloomberg opinion columnist covering industrial companies and financial services in Asia. Get all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download the Mint News app mode to get daily market updates. more topics #bitcoin #cryptocurrency #BSE Read next story