As BTCS Announces ‘Bividends’, Are Bitcoin Dividends the Next Big Thing?
BTCS has announced that it will commence the payment of dividends to its shareholders in Bitcoin. The blockchain technology-focused firm becomes the first NASDAQ-listed company to offer what it calls ‘Bividends’. This move is part of its wide-reaching initiative expected to drive growth in 2022. It also published a new investor guide on its successes, future growth plans, and underlying market dynamics.
BTCS Stock Price Reacts Positively
Following the announcement, BTCS share value surged almost 44% to close at $4.36 at the trading day’s close. This made it the third-best performer on NASDAQ after Lixte Biotechnology and Mainz Biomed BV.
Coincidentally, the minutes of the Federal Open Market Committee (FOMC) meeting held in mid-December last year was released on the same day. Despite not directly impacting the BTCS share price, it caused the Nasdaq composite price to plunge. The stock price fell by about 3.3% at the trading day opening on the 6th of January. The minute of the FOMC report shows that the planned interest rate hike may happen faster than anticipated.
The Bividend offered by BTCS is optional to investors, who can choose to receive their dividends in Bitcoin or cash. Details of the announcement reveal that investors will receive $0.05 per share in whichever payment option they opt for. Also, the first payout is scheduled for March 17, 2022, with shareholders having ample time to complete the opt-in process.
“BTCS intends to pay $0.05 per share in Bitcoin, based on the Bitcoin price on the ex-dividend date. Investors who do not elect to receive the Bividend in Bitcoin will receive a cash dividend of $0.05. We have set a record date of March 17, 2022, to leave ample time for our shareholders to complete the opt-in process by the March 16, 2022 Ex-Dividend date opt-in deadline. The Bividend and cash equivalent dividend for those not electing to receive a Bividend will be paid as soon practical after the record date.”
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Mixed Reactions Follow Bividend Announcement
Famous analyst Anthony Pompliano, who has shared analysis suggesting the intended hike in interest rates may be beneficial for Bitcoin, expressed his surprise at the news. He tweeted his sentiment about the inevitability of Bitcoin following its adoption as a means to pay out dividends.
However, other crypto enthusiasts expressed concerns that the move by BTCS is just a marketing ploy, with no merit behind it.
In the meantime, financial experts have warned investors against investing in BTCS stock based on the hype surrounding its Bividend launch. Ivory Johnson, the founder of Delancey Wealth Management, recommended the purchase of Bitcoin directly if they want to gain exposure to the digital asset. His sentiments are shared by Douglas Boneparth, president of Bone Fide Wealth.
Boneparth described Bividend as a “really neat bridge” for institutional investors interested in owning Bitcoin. Nonetheless, he observed that BTCS’s offering is more of a feature than a product. He emphasized the importance of investors focusing on other criteria before purchasing BTCS shares, such as the company’s future cash flows.
A close look at BTCS financials is revealing and may support the fears analysts have. Its performance is poor across most metrics like the price to earnings ratio, earnings and revenue history, and historical return on equity. It appears to be losing money while paying its key personnel handsome paychecks and bonuses.
However, other benchmarks like debt level reflect better performance. This instils the confidence that they should be able to pay their dividends to their shareholders.
Bitcoin Dividends as a Possible Answer to Inflation
The Bividend move by BTCS is quite a commendable one as it continues the trend of mainstream Bitcoin adoption. However, it is yet to be seen if other companies will follow suit and pay out dividends in crypto.
It makes sense for companies to adopt the foremost cryptocurrency as a form of payment at face value due to its apparent advantages. These include:
- Its position as an asset with a better hedge against inflation than gold,
- High volatility, which gives it excellent growth potential,
- Credibility in the financial market. It has earned its place as the 9th largest asset globally, by market.
This development may have sparked mixed sentiments from crypto enthusiasts. However, time will tell if it becomes an industry staple or simply a marketing ploy adopted to boost BTCS share value.
Do you think more companies should adopt dividend payout in cryptocurrencies? Let us know in the comments below.