MicroStrategy Continues Bitcoin Buying Spree With $53M Net Loss

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MicroStrategy, the largest corporate holder of Bitcoin (BTC), reported a net loss of $53.1 million in the first quarter of 2024, while the firm continued to stack more Bitcoin in April.

The net loss came as the firm recorded a $191.6 million digital asset impairment loss in the quarter, up 10 times from the prior year period. Revenue also fell 5.5% compared to the first quarter of 2023, reaching $115.2 million, according to MicroStrategy’s Q1 results filing.

MicroStrategy and Bitcoin

MicroStrategy is, however, yet to adopt the new digital asset fair value accounting standard, which would have taken into account the 65% increase in the fair value (or market value) of Bitcoin during the quarter.

As a result, MicroStrategy’s carrying value of Bitcoin was marked at $5.07 million at $23,680 per Bitcoin per the traditional accounting method, instead of $15.2 billion if it had taken the fair value approach.

FASB Amends Rules

This is despite the firm writing a letter to the Financial Accounting Standards Board (FASB) in May 2023 in support of the new standard, and about seven months later, FASB amended its rules to mandate fair value reporting of digital assets for fiscal years after December 15, 2024.

Meanwhile, the software firm turned “Bitcoin development company” has already bought another 122 Bitcoin for $7.8 million in April, the financial statement shows. It now holds 214,400 Bitcoin, worth $13.5 billion, bought at an average purchase price of $35,180.

MicroStrategy Raised Funds to Buy BTC

MicroStrategy raised $1.5 billion from two convertible note debt offerings to acquire another 25,250 Bitcoin in the first quarter, making it the firm’s 14th consecutive quarter of adding more Bitcoin to its balance sheet, noted Phong Le, MicroStrategy’s president and CEO.

Overvalued Shares

MicroStrategy (MSTR) stock fell 3.3% in after-hours trading after the announcement, according to Google Finance.

Bitcoin’s 65% increase sparked a near-unprecedented MicroStrategy rally in the first quarter, surging over 170% to $1704 by the end of March. However, MicroStrategy’s stock has since fallen to $1,292, according to Google Finance.

Investment firm Kerrisdale Capital highlighted the waning relevance of MicroStrategy shares as a proxy for Bitcoin investment, adding that the shares are overvalued and that the firm has taken short positions on them.

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