Bitcoin-holding MicroStrategy records a $1 billion loss… Find out why!
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Answer Bitcoin-holding MicroStrategy records a $1 billion loss… Find out why!
MicroStrategy reported a net loss of $170 million, or $11.58 per share, in the first quarter of 2022.
The bulk of this loss was driven by bitcoin depreciation fees.
MicroStrategy owns a significant share of Bitcoin and is the largest publicly listed company that holds Bitcoin in its vault, with approximately 129,218 BTC held with a total market capitalization of $4.9 billion.
The number represents nearly two-thirds of the company’s total assets.
As it is known, the company is owned by “Michael Saylor”, who is famous for his full support of Bitcoin.
Micro-Strategy and Bitcoin Strategy:
in press release MicroStrategy reports that its bitcoin book value is nearly $3 billion, reflecting a cumulative impairment loss of more than $1 billion since the acquisition.Read:Western Union CEO disliked Ripple’s bid
The average cost of each bitcoin held by MicroStrategy is around $30,700, well below current market levels of around $38,000.
The value is even lower than the lowest level for bitcoin this year, which is recorded at around $33,000.
The MicroStrategy data provided is as of March 31 only, meaning it does not reflect the roughly 20% drop in bitcoin prices recorded in April.
The company bought 4,167 bitcoins in March at an average price of $45,714 per bitcoin.
As of May 4, the company has lost nearly $38 million in this investment.
Weakness in the world’s largest cryptocurrency is likely to affect MicroStrategy’s balance sheet.
Is it true that MicroStrategy is secretly selling Bitcoin?
MicroStrategy’s results show that until at least March 31, accusations by Michael Saylor of secretly selling bitcoin appear to be unfounded.
Saylor denied the allegations as well, and continued to talk about Bitcoin adoption.
But given the company’s losses in its bitcoin holdings, the company may face pressure from shareholders to start selling bitcoin to improve its profitability.
This scenario could play a role if bitcoin prices fall further.Read:Coinbase blocks 25,000 Russian addresses allegedly linked to illegal activity
The company also leverages debt for its bitcoin purchases, making it more likely to lose money.
Currently, there is no indication from MicroStrategy or Saylor that they intend to sell their bitcoins.
She told MicroStrategy that it may explore more opportunities with its debt-free Bitcoin estimated at 95,000 BTC.
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