Financial services and digital payments firm Block Inc. may become the first company in the S&P 500 with an explicit Bitcoin strategy, according to Matthew Sigel, head of digital assets research at VanEck. While companies like Tesla already hold Bitcoin, Sigel argues that Block’s deliberate approach to Bitcoin accumulation sets it apart.
Block’s Path to S&P 500 Inclusion
Sigel outlined on January 9 that for a company to join the S&P 500 index, which tracks the top 500 U.S. companies by market capitalization, it must meet six main criteria:
- Market Cap: Must exceed $18 billion.
- Public Float: At least 10% of shares should be publicly traded.
- Earnings: The most recent quarter and the previous four quarters combined must show positive GAAP (Generally Accepted Accounting Principles) earnings.
- Liquidity: The company must demonstrate high stock liquidity.
- IPO Seasoning: It should have been publicly listed for more than 12 months.
- Domicile: Must be headquartered in the United States.
Sigel noted that Block achieved the earnings criteria as of Q1 2024 but emphasized that inclusion in the S&P 500 is ultimately determined by the discretion of the Index Committee. Historically, companies meeting these criteria have been added to the index within three to 21 months.
Why Block Stands Out
Unlike Tesla, which owns Bitcoin but lacks a formal strategy for its accumulation, Block allocates 10% of its monthly Bitcoin gross profits to Bitcoin investments. This “predetermined and recurring cadence” avoids the pitfalls of market timing, according to Sigel.
Block’s founder, Jack Dorsey, is known for his strong advocacy of Bitcoin, and the company is currently the eighth-largest corporate Bitcoin holder, with 8,363 BTC valued at approximately $775 million, according to BitcoinTreasuries.NET.
The Case Against Other Contenders
While Coinbase also meets the technical requirements for S&P 500 inclusion, Sigel believes it would be a more controversial choice due to its “pure-play crypto exposure.” He also highlighted sector diversification as a consideration, noting that financial firms make up about 14% of the S&P 500, leaving room for companies like Block to join.
Block, formerly known as Square, announced on January 10 that it will change its ticker symbols from “SQ” and “SQ2” to “XYZ” to align with its 2021 name change. The company is also set to release its Q4 2024 financial results on February 20.
