MicroStrategy Buys More Bitcoin Despite Reporting Net Loss

MicroStrategy, the software company known for its massive Bitcoin holdings, reported a net loss of $53.1 million in the first quarter of 2024.

The loss stemmed from a $191.6 million impairment charge on Bitcoin due to the use of the historical cost accounting method, which doesn’t reflect the recent price increase. MicroStrategy argues this method provides a more conservative financial picture.

Firm Doubles Down on Bitcoin

Despite the loss, MicroStrategy remains bullish on Bitcoin and added another 122 BTC to its portfolio in April, bringing the total to 214,400 coins. The company spent an average of $35,180 per Bitcoin, significantly lower than the current market price of $63,000. MicroStrategy raised $1.5 billion earlier this year to fuel its Bitcoin buying spree.

New Accounting Standard on the Horizon

A new accounting standard requiring fair value accounting for digital assets comes into effect in 2025. Under this standard, MicroStrategy’s Bitcoin holdings would be valued at market price, potentially boosting its reported financials. The company is still evaluating when to adopt the new standard.

Market Reaction Mixed

MicroStrategy’s stock price fell 3.3% after-hours following the earnings announcement. Investors seem cautious about the company’s heavy reliance on Bitcoin’s volatile price movements.

MicroStrategy’s Strategy: Long-Term Bet on Bitcoin

The company’s Bitcoin accumulation strategy reflects a long-term belief in the cryptocurrency’s potential for growth. MicroStrategy’s CEO, Michael Saylor, is a vocal Bitcoin advocate and sees it as a valuable asset for corporate treasuries. However, the company’s financial performance remains heavily tied to Bitcoin’s price fluctuations.