Following the implosion of Silicon Valley Bank, Bitcoin price has been surging and businesses across the globe are restrategizing their finances as a result.
Billionaire venture capitalist Tim Draper has published a list of recommendations for businesses in the new macro climate, in which he recommends companies keep a portion of cash in Bitcoin to cover payroll.
Tim Draper Tells Businesses To Keep Payroll In Bitcoin
Things got complicated extremely quickly for business customers of Silicon Valley Bank. Big tech companies with millions and billions of dollars in the bank, are suddenly worried about their deposits.
It’s caused a mad dash to diversify or move to bigger, perceived safer banks, and a huge rally in Bitcoin from $20,000 to $28,000 in two weeks. Businesses are feeling insecure about their money in an unfamiliar way, leading to uncertainty.
Billionaire investor Tim Draper has shared some strategies he recommends that could allow businesses to better position themselves amidst continued issues in the banking sector.
Among them, include keeping “at least 6 months in short-term cash” split across a local and regional bank, and “at least two payrolls worth of cash in Bitcoin and other crypto currencies.”
Will Companies Move Cash Into Crypto?
The idea behind the crypto-related recommendation is that even in the event a business can’t access their money from a banking institution, they’ll at least be able to cover payroll for two payroll cycles.
This is especially important for tech firms in the Silicon Valley area, where in the state of California company CEOs and other officials can be held personally liable for unpaid wages.
The costs of payroll can be considerable and require access to liquid funds. For example, Google in 2022 had over 190,000 employees, with an average salary of $133,000 per year according to data. Assuming no variation in these numbers, two weeks of payroll would be $971 million, while two months would be $4.12 billion.
Many employees get paid bi-weekly, which would be at least $1.9 billion per payroll cycle. And this is just one major tech company of size. If businesses actually listen to Draper, the amount of money that could flow into Bitcoin and crypto would be incredible.
And why wouldn’t they listen? Draper is a venture capitalist that’s made winning bets on Coinbase, Twitch, Tesla, Twitter, and Robinhood. Could this be why Draper expects Bitcoin to surpass $250,000 per coin?
