MicroStrategy, a software company, just announced a net loss for the first quarter of 2022, which appears to be majorly due to its Bitcoin holdings.
For the first quarter, the company recorded a net loss of $170 million, or $11.58 per share, down from $183.2 million last year. The majority of the loss was due to a $170.1 million digital asset impairment charge as the value of the company’s Bitcoin holdings dropped.
MicroStrategy has the hugest Bitcoin holdings of any publicly listed company, with around 129,218 tokens valued at $4.9 billion. This amount accounts for roughly two-thirds of the company’s total assets.
Michael Saylor, a well-known Bitcoin maximalist, owns the company.
MicroStrategy is keeping Bitcoin at loss
According to a press release, the carrying value of the software developer’s Bitcoin is roughly $3 billion, suggesting a cumulative impairment loss of more than $1 billion since the acquisition.
MicroStrategy’s average cost per Bitcoin held is around $30,700, far below current market levels of around $38,000. The value is significantly lower than Bitcoin’s lowest point this year, which was about $33,000. MicroStrategy’s data reflects till March 31, so it doesn’t account for the over 20% drop in Bitcoin prices in April.
In March, the company bought 4,167 tokens at an average price of $45,714 per Bitcoin. It has lost $38 million on the investment as of May 4th.
MicroStrategy’s balance sheet is likely to be weighed down even more by the world’s largest cryptocurrency’s weakness.
Saylor seems not to be selling BTC at the back
The MicroStrategy’s results demonstrate that, at least until March 31, Saylor’s charges of secret Bitcoin selling appear to be false. Saylor has refuted the charges and has stuck to his pro-Bitcoin stance.
However, given the losses on its Bitcoin holdings, the company may face shareholder pressure to start selling Bitcoin to boost its profitability. If Bitcoin prices continue to decrease, this scenario may play out. The company is also using loans to fund its Bitcoin purchases, putting it at risk of losing money.
Despite this, MicroStrategy and Saylor have made no indication that they intend to sell tokens. MicroStrategy also stated that it may pursue additional opportunities with its 95,000 Bitcoin tokens that are not tethered to debt.
