It looks like “profits” will be a thing now.
BTCS (BTCS, $4.36), a self-proclaimed company focused on blockchain technology, announced on Wednesday the first-ever dividend payable in bitcoin by a Nasdaq-listed company.
And while it may be inherently contradictory to the purpose of traditional cash dividends, you can still expect more dividends to emerge from other companies in the future.
BTCS intends to pay registered shareholders a one-time dividend of 5 cents per share of bitcoin, based on the price of bitcoin on the ex-dividend date. Investors who do not opt out of bitcoin will receive a cash dividend of 5 cents per share.
“We want to reward our legacy shareholders for their continued support and encourage financial freedom by providing the means to enable direct ownership of bitcoin and other digital assets,” CEO Charles Allen said in a press release.
Before you say “make it stop”, know that a lot of crypto commentators have already started making holes in the Bitcoin payout hypothesis.
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For one thing, above all else, bitcoin and cryptocurrency in general are basically attractive like my guess assets. Traders love it for its volatility and return potential.
Nobody buys bitcoin for their future cash flow because bitcoin has no future cash flow. Buying bitcoin for income — that is, for dividends, which are paid out from cash flow — makes less sense.
This is a one-time return to boot.
trick? Probably. But the profits may be here to stay
Everything you really need to know, he said Bloomberg Matt Levine, is that BTCS is a “fairly unpopular little company”, but it did an effective marketing trick. After all, BTCS shares surged more than 40% on the day of the low news.
“Dividend is a terrible name but it’s clearly a good meme-y crypto ploy to get attention,” Levine wrote. “BTCS will pay out about $500,000 in dividends, which it bought about $15 million in market capitalization. Just a good deal!”
But also be aware that BTCS stock is still down nearly 50% since its debut on the Nasdaq in September. Its market value, just under $45 million, is still pathetic. Its average daily volume of 1.2 million shares reveals a clear lack of interest among market participants on most trading days.
Where this becomes interesting – or crazy, depending on your point of view – is that BTCS is unlikely to be the last source of crypto earnings. This is because, if nothing else, the BTCS movement has worked well as an attention-getting device. Somewhat unfortunately, we are talking about BTCS In this post now.
But a one-time bitcoin (or cash) payment to the company does not change the thesis of investing in BTCS stock (whatever that is).
As for the broader concept of dividend, it makes sense that we’ll see copycats – and possibly many more – soon enough. Suffice it to say that for now – and then – attractive, old-fashioned common stock investors would be better off getting rid of this noise.