Apple (Apple shares - ticker AAPL) is the largest publicly traded company in the world, with a market capitalization of $ 2,3 trillion. That said, it's almost natural to assume that after electric vehicle maker Tesla's announcement of the purchase of $ 1,5 billion worth of bitcoin, Apple may want to jump into the cryptocurrency fray.
A new report from brokerage firm RBC Capital Markets shows that Apple, which already provides payment wallets to millions of consumers in an increasingly digital economy, could earn more than $ 40 billion annually from the cryptocurrency business. If this happens, it could also upset the balance around the crypto sector, leading the United States to completely review its internal policy relating to cryptocurrencies.
Apple should take advantage of the momentum and low competition in the industry
RBC analyst Mitch Steves calculated that payments company Square (SQ) generates about $ 1,6 billion in bitcoin-related revenue per quarter on an estimated 30 million active user base.
Apple has a base of 1,5 billion active users, and even assuming only 200 million of them transacted in cryptocurrencies, that would still be nearly seven times that of Square, according to the report.
According to the calculations, therefore, the potential gain would exceed $ 40 billion per year (15% incremental). The report also states that the research and development costs to be committed to the mission "would be minimal in our view as Square's entire R&D budget is less than $ 1 billion."
Competition in the cryptocurrency transaction space "is low," analysts wrote. Laws make it difficult for US consumers to purchase cryptocurrencies but Apple could solve cryptocurrency regulatory and KYC (Know-Your-Customer) challenges if it created a closed system where it only transfers ownership of cryptocurrencies between customers, explains the report.
It could also develop an open system that uses a bitcoin (BTC) wallet and the Bitcoin blockchain's Strike banking service or Lightning Network to reduce the cost of converting fiat to cryptocurrency, they added.
A possible stance by Apple in this direction could also reduce the likelihood of the US banning bitcoin in the future, analysts said. In this way, in fact, the United States would acquire most of the crypto assets in a global perspective and, at this point, it would not be logically sensible to ban them, analysts explained.
Bitcoin in Apple's balance sheet
There is also another way Apple could choose to finance the project: investing in bitcoin. At the current price, if the company bought, for example, $ 5 billion worth of bitcoin, a 10% increase in the price of the underlying asset would be enough for the company to fully finance the entire project. "This is a solid value proposition from our point of view as the business would be funded without diluting other company projects."
