There are moments when you know that the hysteria that always precedes a crash has arrived. Take this, from the FT:
London-listed companies are turning to bitcoin to boost their share prices, drawing Europe's largest equity market into a growing global trend in which businesses are transforming themselves into proxies for the cryptocurrency.
At least nine companies, from a web design business to a gold miner, have in the past week announced that they have either bought bitcoin to add to their corporate treasuries or plan to do so.
Economic substance has ceased to matter. All that is left is speculation in a meaningless asset or literally no inherent worth.
The crash is going to be very uncomfortable when it comes.
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“London-listed companies are turning to bitcoin to boost their share prices”
Share prices are based on a range of factors & expectations I struggle to understand how the value of a company’s bit-coin “assets” can easily be valued & thus reflected in the share price. Has the silly season arrived early?
Or is this an example of how the UK finance sector is becoming more detached from reality, a process which started in the 1960s btw – with, arguably the motorcylce industry as a good example – no shortage of good engineers quite capable of designing motorbikes as good in everyway as the Japanese – but no investment – in die-casting for example – which meant a death-knell for the industry). Rinse & repeat for almost all MANUFACTURING sectors . The UK never lacked or lacks for money – but those with their hands on its control don’t understand, don’t like and don’t want to be involved with something unpleasant such as “industry”. but Bit-Coin – that’s sexy. Its a bit like all those instruments of the early 2000s, CDOs, etc. & all those were well understood, wern’t they? UK finance sector – a bunch of kids playing make believe.
1) Silly season has arrived.
2) Detachment from reality is now the norm.
3) The hope is in financial engineering of the most absurd form.
4) Actually making stuff of value is so ‘yesterday’. Who would want to do that?
5) Wait for the crush over there in a corner reserved for the gullible and fools who wish to lose their money.
A global failure of the monetary system is probably the only way we’re going to convert from an economy based on greed & excess consumption to one based on sufficiency and sustainability.
This is much worse than it is being portrayed. Bitcoin is a clear and present danger to economy stability. These decisions these companies have made have once again added more risk to the economy.
The worst of it is, is that someone somewhere is going to get bailed out. And that might mean even more austerity in the long run.
I hope no accountants are going to accept cryptocurrency holdings as having any value?
They will accept they have value – there is a provable market worth on a day. That is all they look for.
“on a day” – but on the next day? If you have stock to sell, aren’t you in a stronger position if you mark down it’s value rather than assume you’ll eventually sell it all at normal price?
Marking down value for accounting has nothing to do with the ability to sell
Accounts, rightly or wrongly, are prepared on a mark to market basis, and that means value on the day in most cases
This is a natural progression.
Business used to be about making a living, or getting a decent return on capital, for…
1. Making stuff people either needed or wanted
2. Providing a service people either needed or wanted
(without people having to be brainwashed by advertising or parasitic influencers into feeling inadequate without it).
Then “finance” arrived, profit extraction, asset stripping, takeovers, acquisitions etc.
Those first two things became very unimportant, along with customers and employees.
So obviously, cryptocurrency. Why not? After all if it all goes pearshaped, bankruptcy and bailout will protect the important people (and who cares about customers, employees and supplier-creditors?).
I’m getting bitter aren’t I?
Yes, but don’t worry about it…
I think all of this “Financial Complexity” will eventually evaporate into bad memories when we remember that money is merely a token of exchange for goods and services. A simplification of financial product matters – certainly in my job, with increased annuity sales, more use of passive index funds (“Evidence-Based Investing”), and other, simpler, ‘basic’, products like term life insurance, etc., is already underway in my experience. Some life insurance companies are even producing transparent, value-for-money, insurance products, rather than trying to offer hubristic “Magical Solutions”!
I really hope you are right…
I have a lot of sympathy for what you are saying here. However, I have a question that has always puzzled me about the entire field of economics. What do economists mean by terms like “inherent worth” or “inherent value”?
A thought experiment. If you gave scientists a piece of gold and asked them to describe it, what would they say?
I think they would discuss surface aspects such as mass and length. They might also discuss hidden aspects such as atomic number and atomic weight. However, they would not discuss value or worth.
Mass and length are inherent characteristics. The gold would have mass and length even if humans did not exist to measure these characteristics (or to devise units of measure).
Value is not inherent. It is a human invention. It means whatever we decide that it means. For example, there is no objective measurement of value. Value seems to be determined mostly either by convention (e.g. valuing something at cost) or by consensus (e.g. via markets).
So what do economists mean by “inherent value”, particularly as Keynes compared value to the result of a beauty contest? I took that to mean that Keynes thought that there is no such thing as inherent value.
I woulkd define it as value in use rather than value in exchange
Value in use is not inherent either. It is entirely subjective. What is useful to me might not be useful to you and vice versa. The scientists in my thought experiment would be even less likely to describe the value in use of gold
So, you answer is?
And why do you think use value is subjective? Are you saying there is no inherent use value in water?
Water is essential for human life. That is a scientific truth with which the scientists in my thought experiment would happily agree. The concept of value in use adds nothing to the scientific debate.
Economics and politics are not about validating such scientific truths. Those belong in other domains. Economics and politics are about social choices regarding human institutions and human inventions. The entire point of economics and politics is to debate which choices have more value and which have less value, and what are the trade-offs.
You ask what is my answer? However, my point is that it is not for me or any other individual to determine what has social value on behalf of everyone else. I would turn the question around and ask why you think that it is up to academic economists to tell the rest of us what has value?
They don’t.
They say there is a price not set by them.
Next?
Looks like some “geniuses” are trying to follow the Microstrategy route. There a second tier Business Intelligence software company decided that competing with the big boys and the up and coming tyros in that field was getting too hard and switched to riding the crypto rollercoaster with the funds they had available. Has proved “successful” so far and I’m sure those involved have made a load of money but how many times can this trick be repeated before the hype bubble inflates too far and bursts. My bet is that those in the know will cash in just before the bubble bursts.
Energy consumption alone should be enough to put companies off this madness.
Bitcoin’s network currently uses an estimated 138 terawatt-hours (TWh) of electricity per year, according to the Cambridge Centre for Alternative Finance (2025).
For comparison, the entire UK electricity generation in 2024 was approximately 285 TWh.
So Bitcoin’s consumption is almost half of the UK’s total annual electricity output.
The environmental impact is substantial:
Estimated carbon emissions from Bitcoin mining are around 40 million tonnes of CO₂ equivalent per year – similar to the total emissions of countries like Greece.
While some Bitcoin mining uses renewable energy (especially hydro), much still relies on fossil fuels (e.g., coal in parts of the U.S. and Asia).
The system also generates significant electronic waste, as mining hardware quickly becomes obsolete.
The message is clear for any company that cares about its market reputation, or indeed human existence. Don’t touch it.
That very interesting, but I wonder how much they’ve spent…
According to this website
https://companiesmarketcap.com/gbp/united-kingdom/largest-companies-in-the-uk-by-market-cap/#google_vignette
the 100th largest company by market capitalisation is Taylor Wimpey, who are “worth” £4.2 billion. The four largest all have market capitalisation of more than £150 billion each.
Bitcoin price seems to be currently be between £78,000-£79,000 “per coin”. So even for a company worth £4.2 billion, they’d have to trade a good proportion of their otherwise useful spare cash (or indeed their own shares that they hold) for their resulting Bitcoin assets to make any appreciable difference to their “value”.
We’re into the ‘Ponzi stage’ as Hyman Minsky called it.
The only way to cover liabilities will be to make capital gains (obviously so with Bitcoin, since it doesn’t pay any income).
What’s the likelihood that (IF they make Bitcoin gains) some of these companies will then sell; and use the extra cash for share buy-backs – or even to ‘go private’ again? Owner-managers’ and C-suite occupants’ gain…
If lawmakers(governments) can prohibit the manufacture and trading of substances that are dangerous to the health and wellbeing of its citizens, they can do the same with financial products or instruments. I would hope that responsible govs( I exclude Trump’s regime) are already looking very closely at cryptocurrencies with a view to preventing their use by whatever means are available to them.
I realise, of course, that these currencies are already well established in financial systems, but despite this difficulty, govs have powers to change this, if they were prepared (brave enough?) to use them.
There will need to be a crash first, I am afraid.
Then they will say, why didn’t anyone tell us?
I always thought bitcoin was the domain of scammers like Trump etc. and serious financial institutions kept clear?
Not now.
The fools are piling in.