Bitcoin or reinvest in your business?

If you have a truck that pays for itself in three years, the objection makes sense: why buy bitcoin when another truck generates more cash? Often the truck wins, and this article gives you a way to check that with your own numbers. Bitcoin only enters the conversation with money left over after the company covers what it owes and funds the projects worth doing. There it competes on its own characteristics, which have little to do with a truck's return.

The next peso already has commitments

Before comparing investments, find out how much cash is actually free. Build a calendar for the coming months with payroll, taxes, debt payments, maintenance and seasonal inventory. Then test it against a bad month: a client who pays late, or a unit stuck in the shop.

What remains after that, and after a reserve you define, is the only money this article discusses. There is no number of months of reserve that fits every company. A fleet with fixed contracts needs less cushion than one with seasonal income. A credit line helps, though it counts as reserve only if the bank keeps it available when you need it.

How to measure another truck

What matters about a new truck is the additional cash it generates. Its gross sales say little. From the extra income you subtract the driver, diesel, insurance, maintenance, tolls and days off the road. The working capital you tie up counts too, and so does what the unit will be worth when you sell it.

The payback period tells you how many years it takes to recover what you invested, though it ignores everything after that. Net present value (NPV) brings all the cash flows back to today at a minimum rate you choose, and tells you whether the project clears it (Damodaran, NYU Stern). ROIC compares after-tax operating profit with invested capital, so it needs accounting data a quick cash-flow calculation doesn't have.

A second truck isn't an exact copy of the first, either. It may need another client, another reliable driver and more of your time.

One truck, two scenarios

This example uses made-up figures to show the method. It is not a dealer quote or a client's case. Everything is in nominal pesos, before taxes and without financing.

The unit costs 1,000,000 pesos and needs 100,000 in working capital. The plan gives it a five-year life. In the base scenario it leaves 350,000 pesos a year after all its costs and sells for 250,000 at the end. In the bad scenario it leaves 220,000 a year and sells for 150,000. In both cases you recover the working capital in year five. The minimum rate is 15% a year.

At 15%, the base scenario has an NPV of 247,266 pesos and pays back in 3.1 years. The bad scenario has an NPV of −238,232 pesos and takes the full five years to pay back. If you raise the minimum rate to 25% in the base scenario, NPV falls to −44,064.

The same truck can be a great investment or a poor one depending on how often it works. That is why testing your assumptions is worth more than picking a single figure.

Liquidity and concentration

A truck sells in weeks, usually at a discount. Bitcoin can be sold in minutes. Still, owning an asset that is easy to sell is different from having pesos on payroll day: the price may have fallen, and every platform has limits and review processes.

Then there is concentration. If your income depends on one sector and a few clients, your wealth already carries that risk. Bitcoin adds a different risk, without reducing the first one by definition. Nobody has shown that bitcoin rises when your sector struggles. The hard scenario is the one that combines the two: the business generates less cash right when the bitcoin price drops.

When bitcoin makes sense to consider

A treasury allocation to bitcoin makes sense when several conditions hold together. The money is left over after the calendar and the reserve. You won't need it for several years. You can watch a sharp drop without the company missing payments, and you have another source to cover anything urgent. The company has also decided in writing who authorizes purchases, how the bitcoin is held and when the position gets reviewed.

If the truck clears your minimum rate on honest assumptions and the company can run it well, it comes first. Bitcoin competes for the surplus.

To decide how much to allocate, How much to invest in bitcoin explains how to think about position size and tolerable drops.

Questions for your accountant

Taxes and accounting change the result of both options, and they depend on your company's tax regime. Mexico's income tax law lets a company in the general regime deduct up to 25% a year of a cargo truck's cost (LISR, article 34, section VI). Other regimes use different rules. In Mexico, accounting for cryptocurrencies follows CINIF's NIF C-22 standard (CINIF annual report), which treats these assets differently from international standards.

Take these questions to your accountant (contador):

• Which regime is the company in, and how does it deduct a cargo vehicle?

• Is any immediate-deduction incentive in force that applies to this purchase?

• How would swings in the bitcoin price affect the financial statements and any commitments to the bank?

• What documentation is needed for each purchase and each sale?

Our guide to bitcoin taxes for companies explains the general income tax treatment when you sell and what NIF C-22 requires.

A sheet to decide and keep a record

Before deciding, put the numbers on a sheet. On the company side: cash available, payment calendar, reserve, debts with their rates and commitments to the bank. On the project side: cost, working capital, useful life, extra cash flow per year, resale value and a discount for execution risk. On the treasury side: the amount you would consider for bitcoin, when you might need it and a drop you choose for a stress test.

The sheet can end in reinvesting, keeping cash, paying down debt, distributing profits or allocating a portion to bitcoin. Write down the decision, the assumptions and a date to review it. If the company decides to buy, How a company buys bitcoin in Mexico explains the process and the paperwork.

This article is educational and is not financial, tax or accounting advice. The truck example uses hypothetical figures. The tax rules cited are Mexican rules as of the publication date. Review your case with an accountant.