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MicroStrategy Reports Q1 Loss After Bitcoin Holdings Impairment Charge

MicroStrategy Reports Q1 Loss After Bitcoin Holdings Impairment Charge

Apr 30, 2024

MicroStrategy Reports Q1 Loss After Bitcoin Holdings Impairment Charge

MicroStrategy disclosed a net operating loss of $53.1 million, or $3.09 per share, for the first quarter, significantly impacted by a Bitcoin impairment charge of $191.6 million. This information was released in a press release on Monday afternoon.

Despite the substantial rally in Bitcoin (BTC) prices during the first quarter, MicroStrategy opted not to adopt the recently introduced digital asset fair value accounting standard. This decision led to the reporting of a loss rather than a potential profit. Under the old accounting standard, MicroStrategy's Bitcoin holdings were valued at $23,680 per Bitcoin at the quarter's end, totaling approximately $5.1 billion. This valuation is in stark contrast to Bitcoin's closing price in March of $71,028, which would place the value of the holdings at around $15.2 billion.

Further, the company revealed the acquisition of 122 additional Bitcoins in April, increasing its total holdings to 214,400. At the current Bitcoin price of about $63,000, these holdings are valued at $13.5 billion.

For the year 2024, MicroStrategy has accumulated 25,250 Bitcoins at a cost of $1.65 billion, averaging $65,232 per Bitcoin. Following the earnings report, the company's shares dipped by 3.3% in after-hours trading.

MicroStrategy's CFO, Andrew Kang, addressed the accounting standards during the earnings call, stating that the company is fully intent on adopting the new digital asset fair value accounting rule. He mentioned that the company is evaluating the most opportune time to make this change. Although the Financial Accounting Standards Board (FASB) has set a mandatory implementation date of January 1, 2025, for the new rule, it allows for early adoption.

The press release also mentioned that if MicroStrategy adopts the new accounting rules, it could potentially qualify for inclusion in the S&P 500, according to an analysis by Benchmark.

MicroStrategy Press Release

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