Andy Mukherjee: Would bitcoin’s pixie-dust maths work on Dalal Street?

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 pivoted to buying bitcoin in 2020. It funded its purchases mainly through issuing new stock, convertible bonds, and so on, and is today the largest private holder of the cryptocurrency.

This strategy has worked wonders for the company – its market capitalisation was roughly double its bitcoin holdings for the majority of the post-covid bull market. There’s no credible explanation of exactly why this was so.

Yes, the company was among the early backers of the hottest digital asset of the 21st century, led by famous bitcoin bull Michael Saylor, and provided a convenient way to investors to own the cryptocurrency indirectly by buying its shares (before the US Securities and Exchange Commission allowed spot bitcoin ETFs), but whether all this justified Wall Street paying $200 for underlying assets of $100 is something financial historians of the future will opine on.

Even as of January 2025, MicroStrategy owned bitcoin worth about $49 billion but had a market capitalisation of $94 billion.

However, this spread started to narrow beginning this year. Currently, MicroStrategy’s 640,250 bitcoins are worth around $74 billion, while its market cap stands at $87 billion. The market is still paying more, but not a 100% premium.

Indian twist

Would something like this work on Dalal Street?

BSE last month rejected an application by IT training firm Jetking Infotrain to list its preferential shares that were issued to buy virtual digital assets (VDAs), mainly bitcoin. In May the company’s board of directors approved the allotment of nearly 400,000 shares on a preferential basis at ₹154 per share, totalling more than ₹6 crore, after receiving in-principle approval from BSE.

Interestingly, the company already held 15.02 bitcoins on its balance sheet as of 31 March 2025. After the preferential issue, this increased to 21.

However, in a letter dated 24 September, BSE returned its application to list the preferential shares.

The letter read: “... please note that the object of the issue 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 under review and till final view emerges we would not be able to process the applications of this nature. Accordingly, the application filed by the company seeking listing approval for its proposed preferential issue is returned."

On 10 October the company said it had moved the Securities Appellate Tribunal (SAT) against BSE’s decision.

“The genesis of the matter lies in the fact that the respondent itself, despite being well aware of the object for which such proceeds were to be raised, granted an in-principle approval on 9 May 2025. However, retracted from its position pursuant to the Appellant raising funds and investing in VDAs," the company wrote in an exchange filing.

This marks the first time a listed Indian company is publicly pushing forward with its bitcoin strategy in the country’s muddled regulatory landscape.

Defying gravity, and gravitas

There’s something about bitcoin that always tends towards the extraordinary.

As our Long Story explores this week, Bitcoin is the only asset that exhibits the characteristics of both a safe haven and a meme stock. While everyone is going ga-ga over gold and silver, bitcoin has outperformed them both. And yet, even a flicker of bad news can trigger a violent selloff, as was seen last week following Trump’s latest tariff salvo against China.

A $2.3-trillion market cap token which behaves like a jumpy micro-cap stock. Now how does one deal with that?

Once dismissed as a fringe novelty designed to appeal to basement-dwelling coders and secrecy-minded criminals, bitcoin is now increasingly being viewed as ‘digital gold’ for the 21st century, though it retains its legions of critics.

From a domestic perspective, investors face two major dilemmas. The first is regulatory grey areas, under which cryptocurrencies are effectively recognised as taxable assets but are denied the status of legal tender. And second is the onerous burden of flat 30% tax (plus surcharge and cess) on gains 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 investing.

All of this means the decision to invest in bitcoin requires some serious mental mathematical gymnastics –- perhaps fitting 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.