On Tuesday, Microsoft (MSFT.O) shareholders voted to reject a proposal to diversify assets by investing in Bitcoin. This proposal was put forward by a conservative think tank called the "National Public Policy Research Center," aimed at urging the Microsoft Board of Directors to assess whether investing in Bitcoin aligns with the long-term interests of shareholders.

Despite advocates for Bitcoin like Michael Saylor actively pushing for Microsoft to invest in Bitcoin, the Microsoft Board of Directors and shareholders chose a cautious stance, emphasizing that the company's existing investment strategy can provide long-term benefits to shareholders. Meanwhile, the company remains attentive to the cryptocurrency market to inform future possible decisions.

As a result of this news, Bitcoin prices fluctuated dramatically, dropping nearly $2,000 within an hour before recovering, hovering around $97,350 per coin at the time of writing.

Background of the Proposal and its Supporters

Billionaire Michael Saylor is a staunch supporter of Bitcoin, and his company MicroStrategy has heavily invested in Bitcoin. He expressed support for this proposal and became a primary advocate.

Saylor addressed the Microsoft Board of Directors and CEO Satya Nadella, stating that Microsoft needs to choose between sticking to the past and embracing the future, and that investing in Bitcoin is key to transcending market performance. "Microsoft should seriously evaluate the strategic options for Bitcoin," Saylor said.

In a tweet posted on social platform X on December 1, it was pointed out that if Microsoft converted its cash flow, dividends, buybacks, and debt into Bitcoin, it could potentially add 'hundreds of dollars' to its stock price, create 'trillions of dollars in enterprise value', while reducing Shareholder risk and achieving prosperity under the 'Bitcoin standard'.

Opposing position of the Microsoft Board of Directors.

The Microsoft Board of Directors disclosed the proposal in regulatory filings and publicly opposed it, stating that the proposal was unnecessary as the company was already considering various investment options.

The Board of Directors stated in a statement that Microsoft's 'Global Finance and Investment Services Team' assessed a range of investable Assets to support the company's daily Operation, including those that can provide diversification, inflation protection, and mitigate the risk of significant economic losses due to rising interest rates.

The company added that past assessments had listed Bitcoin and Other Cryptos as one of the options considered, and Microsoft would continue to monitor trends and developments related to Cryptos to guide future decisions. Microsoft further noted:

'As mentioned in the proposal itself, the volatility of Bitcoin is a factor that needs to be considered when assessing it as an investment for corporate financial applications, as companies need stable and predictable investments to ensure liquidity and operating funds. Microsoft already has strong and appropriate processes to manage and diversify corporate finance to achieve the long-term interests of Shareholders, therefore this request for a public assessment of the proposal is unnecessary.'

Microsoft's investment strategy.

Microsoft stated that its management team has a comprehensive process in place to evaluate different investment options. The company's financial team focuses on selecting Assets that help diversify risk, combat inflation, while protecting the company from the impacts of economic uncertainty.

However, market analysis believes that Microsoft's statement indicates they have not completely ruled out Cryptos as a potential investment option for the future, but rather view it as an area that requires ongoing monitoring. The Board of Directors believes that the high volatility of Bitcoin contradicts the company's need for stable investments, therefore there is currently no need for further action.