MicroStrategy Suffers $170.1 Million Impairment Loss on Bitcoin

MicroStrategy has revealed that it suffered an impairment loss of $170.1 million on its Bitcoin investment in the first quarter of 2022.

 

The business intelligence company — which owns more than 129,000 BTC — hasn’t been immune from the sliding value of the world’s biggest cryptocurrency in recent months.

 

An impairment loss is an accounting measure that companies use to disclose how an asset’s value has fallen since it was bought.

 

But this doesn’t mean that the losses have been realized (or in other words, that the investment has been sold) — instead, they’re paper losses that publicly traded companies have to disclose at the end of every quarter.

 

Rather awkwardly, this impairment charge actually eclipses MicroStrategy’s total revenues between January and March 2022, which stood at $119.3 million.

 

Back in March, the company funded its latest purchase of Bitcoin by using the cryptocurrency it already holds in reserve as collateral for a $205 million loan from Silvergate Bank.

 

MicroStrategy’s CEO Michael Saylor heralded the company’s “strong results” in the first quarter, adding:

 

“We also furthered our position as the leading public company investor in bitcoin through the issuance of our first Bitcoin-backed term loan. We have demonstrated that our Bitcoin can be productively used as collateral in capital raising transactions, which allows us to further execute against our business strategy. Today, MicroStrategy is the world’s largest publicly traded corporate owner of Bitcoin with over 129,200 BTC.”

A Long Way to Go

The figures within MicroStrategy’s financial results also powerfully show how the wild swings in Bitcoin’s price can have a huge impact on major investors. As of March 31, its 129,218 BTC was worth $5.9 billion — resulting in a price per coin of $45,602.

 

Fast forward to now, with BTC at $37,800, and this crypto stash is worth $4.8 billion, meaning the value of its investment has plunged by $1 billion.

 

There’s some way to go before MicroStrategy would be nursing a loss on its Bitcoin investment, as the average cost per coin it owns stands at $30,700, with a total cost of $3.9 billion.

 

Last month, Saylor sought to dispel rumors that MicroStrategy was quietly offloading some of its Bitcoin investment — a move that would go against his vows that the company would never sell. He tweeted:

 

“Not sure who needs to know this, but when MicroStrategy makes any material change to its corporate strategy (to acquire and hodl Bitcoin) or to its Bitcoin holdings, we disclose this to our shareholders via SEC filings, available to all.”

 

Even though the crypto markets are looking pretty gloomy at present, Saylor is a vocal supporter of Bitcoin on Twitter — and isn’t afraid to take on crypto critics.

 

As reported, Saylor was one of the authors of a letter that challenged U.S. politicians who made “provably false” statements about Bitcoin.

 

In a not-so-subtle dig, the entrepreneur also reacted to Warren Buffett’s statement that he wouldn’t buy all the BTC in the world if it was offered to him for $25 – ostensibly because it doesn’t produce anything tangible. Saylor tweeted:

 

“I would buy all your Bitcoin for $25.”