Chief financial officers are watching closely after Tesla Inc. this week disclosed a $1.5 billion investment in bitcoin and Twitter Inc.’s Ned Segal mused publicly about potentially paying employees or vendors using the cryptocurrency.
Many CFOs remain hesitant to follow suit. Some point to the volatile price of bitcoin, which could have negative effects on their balance sheets, and question whether the practical uses of bitcoin are worth the risk. Companies’ investing policies in some cases prohibit them from holding digital assets.
The value of Bitcoin more than quadrupled in 2020 and rose further this week following Tesla’s disclosure. It was trading $48,163 on Thursday, up over 6% from Wednesday, according to Coinbase, a digital currency exchange.
CFOs said the swings in the price of bitcoin, which has seen drastic rises and falls in recent years, make it difficult to navigate, similar to holdings of foreign currencies experiencing strong volatility. “One of the risks is that it introduces something similar to currency volatility to the balance sheet and the day-to-day operations of the business,” said Matthew Ellis, finance chief of Verizon Communications Inc.
The telecommunications company currently has no plans to enable bitcoin for payments, Mr. Ellis said, adding that it would bring an added level of complexity to the business.
R. Scott Herren, the finance chief of Cisco Systems Inc., said customers aren’t demanding to pay in bitcoin. “We looked at this pretty hard when I was at Autodesk, as a way of accepting payment”, Mr. Herren said, referring to his time as CFO of the San Rafael, Calif.-based software company. Autodesk Inc. in the end decided against permitting bitcoin as a form of payment, mainly due to volatility and risks around converting it into a regular currency, Mr. Herren said.
Roxi Wen, the CFO of Mozilla Corp., said she is following discussions around bitcoin, but doesn’t consider it an asset worth holding on the balance sheet. While Mozilla, the organization behind the Firefox internet browser, might invest in early-stage ventures related to bitcoin, it wouldn’t allocate its corporate cash to it. “I don’t see us trying to ride the market and benefit from bitcoin or any coin,” Ms. Wen said.
Mr. Segal, Twitter’s CFO, said Wednesday the company continues to review potential uses of the digital currency. His Chief Executive Jack Dorsey is a bitcoin advocate. Payment company Square Inc., which Mr. Dorsey also leads, recently acquired about $50 million worth of bitcoin for its corporate treasury.
Finance chiefs face an accounting challenge when dealing with bitcoin and other digital assets. Because they don’t meet the requirements for cash, inventory or financial assets under current accounting standards, digital currencies have to be treated as indefinite-lived intangible assets, similar to trademarks or perpetual franchises. Companies have to test the value of these assets for impairments, meaning that potential falls in bitcoin could result in write-downs.
CFOs also have to make sure that they are permitted to invest in bitcoins under their company’s investment policy. Tesla on Monday said its board had greenlighted amendments to its investment policies, adding that it can also invest cash in gold bullion and gold exchange-traded funds among other assets.
German software giant SAP SE, currently can’t make similar investments in bitcoin due to the company’s investment policy, which doesn’t cover cryptocurrencies, according to a spokeswoman. Still, the company said it would monitor future developments in terms of bitcoin as a potential strategic investment option, a spokeswoman said.
Online-dating company Match Group Inc. also might have to alter its investment policy to be able to make such an investment, according to Chief Operating Officer and CFO Gary Swidler.
“I am not sure we want to get into that level of speculative currency with our balance sheets,” Mr. Swidler said.
Debbie Clifford, CFO of SVMK Inc., the parent of online-survey company SurveyMonkey, said speculative assets such as bitcoin are a tough sell for small companies that are focused on growth, but may appeal to larger, mature companies.
“I see those companies looking at new and interesting ways to drive value for shareholders with the capital they have to work with,” she said. “We have discussed bitcoin but have not seriously considered investing in it given our current capital structure.”
Kristin Broughton, Mark Maurer and Allison Prang contributed to this article.