Dividends are one of the most attractive features of the stock market, giving investors an opportunity to generate income on top of any capital gains. The cryptocurrency industry has figured out a way to reward market participants with passive income opportunities too, which mostly takes the form of decentralized finance (DeFi). Now the two worlds of dividends and crypto are colliding as one publicly listed company has announced plans to pay shareholders a dividend in bitcoin.
BTCS, a blockchain infrastructure company, is already a pioneer in the crypto industry after listing shares on the Nasdaq in September 2021. Now BTCS and CEO Charles Allen are becoming a first-mover as the maiden company to pay a “bividend” —a dividend distributed to shareholders in leading cryptocurrency bitcoin (BTC).
Adding to the anticipation, the company has launched a countdown to the payable date, which currently hovers at about 70 days or just over two months. This is akin to dog years in crypto given how quickly the bitcoin price can rise or fall. Wherever the bitcoin price is trading in mid-March 2022 (the ex-dividend date) will determine how much bitcoin is equivalent to $0.05 per share, giving investors the opportunity to participate in an activity known as “stacking sats.” A satoshi, or sat, is the tiniest unit of a bitcoin that can be accumulated. Think of it like finding a penny and picking it up.
Social media users cheered the development, with responses ranging from ‘it was only a matter of time' to ‘how do I sign up?' Some were wondering about the logistics of the distribution, considering the company can't write a check for crypto and send it to shareholders. To qualify, BTCS investors must provide the company with a bitcoin wallet address, which could be obtained from a major crypto exchange like Coinbase, Kraken or Gemini, to name a few options. You don't need to have an exchange account, however, and can also use a hardware or mobile bitcoin wallet address. It's getting easier to get bitcoin all the time and you can even generate a bitcoin wallet address on the Cash App by Block (formerly known as Square).
BTCS Stock Soars
Shares of BTCS have soared 40% on the day so far as investors have piled into the stock to capture their share of the bitcoin windfall. Before the bitcoin dividend announcement, BTCS' stock was trading at about $3 per share. Since the announcement, the stock is trading above $4 per share. Volume is strong at 26.8 million shares changing hands today compared to average trading volume of 215,312.
As other CEOs watch, they might similarly jump on the bitcoin bandwagon and choose to pay their distributions in crypto. If the “bividend” catches on, a bitcoin dividend could become a trend within corporate America, one in which mainstream investors could ease their way into cryptocurrencies.
Since the pandemic, companies have been eager to return profits to shareholders in the form of a dividend, with many companies keeping or increasing their payouts last year. As of August 2021, dividend distributions were on pace to reach approximately $1.4 trillion in 2021, as per Janus Henderson data cited by CNBC. That's a lot of bitcoins.
Another trend was set into motion by Michael Saylor, CEO of enterprise software company MicroStrategy. Saylor's company has been routinely adding bitcoin to the balance sheet since 2020 to escape inflation and generate returns. Tech CEOs Jack Dorsey and Elon Musk followed in Saylor's footsteps and have since acquired bitcoins for the Square (now Block) and Tesla treasuries, respectively.
MicroStrategy has purchased an additional 1,914 bitcoins for ~$94.2 million in cash at an average price of ~$49,229 per #bitcoin. As of 12/29/21 we #hodl ~124,391 bitcoins acquired for ~$3.75 billion at an average price of ~$30,159 per bitcoin. $MSTRhttps://t.co/tNxDwaT8VD
— Michael Saylor⚡️ (@saylor) December 30, 2021
BTCS investors who prefer to receive their payout in cash money have the option to do so.
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