top of page

Bitcoin and Cryptofication: the good, the bad and the ugly

Last month, we looked at how the massive demand created by spot Bitcoin ETFs has played an instrumental role in propelling the current bull market, which has seen bitcoin hit new all-time highs pre-halving for the very first time.

Indeed, the new spot bitcoin ETFs have raked in over 500,000 BTC since their launch in January, and Blackrock's IBIT and Fidelity's FBTC are ranked as the top two out of all ETFs globally in their first 50 days of trading, according to Bloomberg.

Figure 1: Top 50 global ETF performance after the first 50 trading days

But the other major strand to the institutional adoption story is the purchase of bitcoin by companies as a means to maintain the value of cash assets and by governments trying to hedge against the risks associated with fiat currencies and geopolitical instability.

Bitcoin's corporate treasury infiltration

While the trend of corporate treasuries drawing down dollar-denominated cash balances in favour of holding bitcoin as a reserve asset, what we call ‘cryptofication’, appeared to slow during the bear market, it's again gaining momentum as bitcoin climbs to new all-time highs and inflation continues to run hot.

By now, anyone paying attention will know that Microstrategy is the largest institutional holder of bitcoin by quite some margin as it continues its evolution into a full-blown bitcoin company. But while they and other North American companies generate the lion's share of the media coverage, corporate acquisitions of bitcoin is happening globally as companies recognise its strategic value to diversify treasury reserves as well as its potential for capital appreciation and new market access facilitation.

Figure 2: Microstrategy dominates the rankings for private companies' bitcoin holdings

For example, European companies such as Germany's Bitcoin Group and Norway's Aker also feature in the top 20 list of private companies that hold bitcoin, once again underlining that this is a global phenomenon. And even though it is clear that private companies may find it advantageous to hold bitcoin for numerous reasons, corporate purchases are still in their infancy.

Sovereign bitcoin accumulation: the final frontier?

Although government purchases of bitcoin are widely regarded as institutional adoption's 'final frontier', it would be a mistake to believe that this process wasn't already very much underway. Indeed, while it is common knowledge that El Salvador has been steadily adding to its bitcoin holdings since it first made bitcoin legal tender back in 2021, unofficial data puts total global government holdings at 2,505,849 BTC.

Figure 3: Top 10 countries by bitcoin holdings

Though there are obvious challenges when it comes to verifying government holdings, it cannot be denied that the rising tendency of countries to add bitcoin to their holdings of reserves reflects the recognition of its potential as a digital store of value. The precise reasons for holding digital assets in general will vary from nation to nation. Some governments can use bitcoin as a way to diversify their investment portfolios or as a hedge against inflation, while others, such as El Salvador, have embraced bitcoin to encourage innovation and financial inclusion.

Another dimension sovereign bitcoin accumulation is the speculation that certain governments are accumulating via their sovereign wealth funds (SWFs). For example, the attendance of one of Qatar’s Emirs at the recent Bitcoin conference in Madeira fuelled speculation that Qatar may soon deploy some of its vast $500 billion SWF war chest for bitcoin purchases. For context, even a 2% allocation of their fund to bitcoin would have similar effects to having an additional BlackRock spot ETF, which has accumulated over $17 billion worth of BTC to date.

At the same time, SWF involvement is not just limited to hodling as we're also seeing evidence of countries getting active in bitcoin mining. For example, in February 2024, the Ethiopian Sovereign Wealth Fund, Ethiopian Investment Holdings (EIH), announced a memorandum of understanding with the Hong Kong-based West Data Group’s Center Service to start bitcoin mining operations in a $250 million data mining project "that is dedicated to establishing cutting-edge infrastructure for data mining and AI training operations in Ethiopia."

Ethiopia is positioning itself as a leader in the data centre space in Africa as part of efforts to boost FDI, with the government introducing favourable "high-performance computing" and "data mining" laws which is where bitcoin mining falls under.

This has resulted in a spate of miners flocking to Ethiopia to take advantage of its positive reception to bitcoin mining, coupled with its abundance of hydropower, favourable weather, and cheap energy costs.

The continent obviously faces significant challenges in the global hash race due to difficulties with transmitting power from electricity-generating assets to end consumers. But despite this, the opportunities are hard to overlook for miners looking to tap under-explored markets. For example, many African nations use "mini grids" to supply electricity to impoverished, primarily rural areas. Bitcoin mining is showing potential to make these mini grids financially viable while also generating funds for additional investments in these neglected areas and more developments in this domain are likely to follow in 2024.

The darker side of cryptofication

As laid out above, it is clear from the above that a growing a number of entities – both corporate and sovereign – are sold on the benefits of adding bitcoin to a treasury portfolio.

However, there's also a has its darker side to this trend, and on the face of it, it isn't hard to see why. Given that Microstrategy has seen its share price rise by a factor of three in 2024 alone – a factor directly linked to its prodigious bitcoin holdings – couldn't a company seek to capitalise on bitcoin's renewed interest by announcing purchases to boost company stock?

One such story is Nilam Resources, a gold miner that announced a Letter of Intent (LOI) with Xyberdata to purchase 24,800 bitcoins on March 24.

Putting aside the fact that LOI's often aren't legally binding, a quick look at Nilam's financials should have been more than enough to raise a few eyebrows. After all, how likely is it that a penny stock gold miner with a total market cap of around $4 million, trading under 2 cents per share and a rapidly shrinking asset base could be buying $1.7 billion of bitcoin?

Nilam attempted to achieve this via legal chicanery, stating it would be "acquiring 100% of the capital stock of MindWave, a special purpose entity in Mauritius, which will hold digital assets including 24,800 Bitcoins and other assets which will serve as collateral to raise capital for investment in high yield generating projects." No matter how much we suspend our disbelief, it's hard not to think of this as a PR stunt to generate interest in their "newly authorized Preferred Class of Series C Stock" via bitcoin.

And as if by clockwork, a day after the announcement, Nilam's share price was up over 1,700%, reaching an ATH of 33 cents, at a $280 million market cap, according to OTCMarkets. But sure enough, Nilam's stock price crashed back below 2 cents after having surged 1,700% to an all-time-high of 33 cents the previous day on the news, as seen in the chart below.

Figure 4: huge pump followed by dump of Nilam following their BTC announcement

It did not take long for holes to appear. Nilam CEO, Ron McIntyre, promptly resigned the day after the announcement and himself stated that Nilam's move "is a classic pump and dump" that will be "investigated by FINRA."

Ultimately, this misinformation hurts investors and raises an important question about companies looking to take advantage of bitcoin's growing appeal to sucker investors into buying their (sky-rocketing) stock.

At the same time, it will be interesting to see if more companies attempt these activities moving ahead. There's a big difference between a failing company buying bitcoin to sucker people into buying their stock and an established company buying bitcoin to increase the value of its stock over the long term. 

That distinction alone should be enough for most people to steer clear of these traps.


For more information about our custom research services please get in touch directly, contact us here. Download our latest featured report below.

Disclaimer: The information contained within is for educational and informational purposes ONLY. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision. No commercial relationships or partnerships exist with any of the technology providers, manufacturers, or suppliers herein.

Recent Posts

See All



Featured Report:


Outside of Bitcoin’s promise to disrupt traditional financial intermediaries through trustless peer-to-peer transactions via a distributed network, its purportedly high environmental impact could well be its most controversial facet. This report presents a non-exhaustive, systematic overview of a cross-section of studies from the past three years that aim to contextualise and quantify the data pertaining to Bitcoin's energy consumption and environmental impact. 

Creative illuminated polygonal lamp made

Exclusive Insights From Our Latest Research

Enter your email address for our best insights once a month
bottom of page