Many companies have started to prefer Ether over Bitcoin to protect against inflation. Ether has become an attractive option for investors due to its affordable price and reliability, and it is backed by a robust blockchain infrastructure.
An analysis by Reuters revealed that as of the end of July, companies held 966,304 Ether tokens on their balance sheets, worth approximately $3.5 billion.
This figure was only 116,000 ether as of the end of 2024.Ether has become the token of choice for those seeking active returns. Unlike Bitcoin, ether can be rewarded through staking (locking tokens). Staking can provide returns between 3% and 4%.
Bit Digital CEO Sam Tabar said, “Ether is a large enough asset at the institutional level, but it is in its early stages with future growth potential.” Ether also powers the Ethereum blockchain, supporting many sectors such as financial applications, lending platforms, and stablecoins.
Anthony Georgiades stated, “Ether is the foundation of decentralized finance and, unlike Bitcoin, is not just a store of value. It functions like oil.”
However, regulatory uncertainty and price volatility are among the main risks hindering the widespread adoption of Ether.
CAUTION AND HYPERBOLIC INVESTMENT
Stocks of Peter Thiel-backed BitMine and gaming media company GameSquare surged 3,679% and 123% respectively after announcing plans to buy Ether. This shows investors’ eagerness to chase crypto-focused momentum. However, analysts warn against over-optimism.
AJ Bell investment analyst Dan Coatsworth said, “The reaction in stock prices bears the hallmarks of meme craze.” Furthermore, the inherent volatility of crypto tokens poses an obstacle for boards of directors who prefer low-risk investments.
Anuj Karnik stated, “Most CFOs wouldn’t buy ether instead of cash. Ether is only a suitable vehicle for companies with high risk tolerance and those with tech-focused treasuries.” Also, crypto assets are generally seen as experimental and are not considered mainstream policy.
Although the SEC has relaxed its stance on staking activities, regulation surrounding this practice is still evolving.
Key questions concern whether staking rewards will be taxed as income and the status of locked tokens on the balance sheet.Michael Ashley Schulman said, “Every staking reward can fall into a compliance gray area.”
However, despite all these risks, some companies continue to resort to share sales or borrowing to finance their ether investments. BitMine received a $182 million investment from ARK Invest. GameSquare CEO Justin Kenna stated that his company may sell shares to invest in ether.
