MicroStrategy’s Bitcoin holdings fall $3.4 billion

MicroStrategy’s Bitcoin holdings fall $3.4 billion

Web Desk
July 3, 2022

MicroStrategy’s Bitcoin holdings fall $3.4 billion

MicroStrategy’s Bitcoin holdings fall $3.4 billion at the end of the second quarter.
The company began purchasing Bitcoin in bulk in the summer of 2020.
MicroStrategy will likely incur a sizable impairment charge when it announces its second-quarter results.

Michael Saylor, the CEO of MicroStrategy, stated that the company began purchasing Bitcoin in bulk in the summer of 2020 because inflation would render cash worthless. At the conclusion of the second quarter, his crypto holdings were worth $3.4 billion less than at the end of the previous quarter.

Technically, under US accounting laws, the fall represents yet another paper loss for the enterprise software developer until Bitcoin is sold, but there are ramifications. MicroStrategy will likely incur a sizable impairment charge when it announces second-quarter results. And for investors, the stock fell 66 percent in the quarter that concluded on Thursday, beating Bitcoin’s 59 percent loss.

Saylor has downplayed any concerns, sticking to his approach and increasing his holdings over the most recent quarter, when Bitcoin witnessed its largest price decline in almost a decade. MicroStrategy announced at the end of June that it would report quarterly results as usual later in the next quarter, despite the fact that Wall Street authorities normally compel corporations to disclose large losses considerably earlier.

MicroStrategy’s Bitcoin hoard was worth approximately $5.9 billion at the end of the first quarter; however, with Bitcoin closing at approximately $18,900 on June 30, that same hoard — including small purchases announced at the end of June — was worth approximately $2.45 billion, or 58 percent less than it was just three months ago.

“To reiterate our strategy, we seek to acquire and hold Bitcoin and long-term,” said Phong Le, MicroStrategy’s president and CFO, on a May 3 conference call. “We view our Bitcoin holdings as long-term holdings and we do not currently plan to engage in sales of Bitcoin.”

MicroStrategy’s senior director of treasury and investor relations, Shirish Jajodia, stated in response to a request for comment that the business has no intention of selling its Bitcoin and that its shareholders back its policy. Jajodia stated that MicroStrategy is protected from short-term fluctuations due to its “robust capital structure.”