The CEO of MicroStrategy, Michael Saylor, said that the company started buying Bitcoin in bulk in the summer of 2020 because inflation would make cash worthless. His crypto holdings were worth $3.4 billion less at the end of the second quarter than they were at the end of the first.
Technically, according to US accounting laws, the fall is just another paper loss for the enterprise software developer until Bitcoin is sold, but it has other effects. When it reports its second-quarter results, MicroStrategy is likely to have a big impairment charge. And for investors, the stock dropped 66 percent in the quarter that ended on Thursday, which was more than Bitcoin’s loss of 59 percent.
Saylor has played down any worries by sticking to his plan and adding to his holdings during the last quarter, when Bitcoin’s price dropped the most in almost a decade. MicroStrategy said at the end of June that it would report quarterly results as usual later in the next quarter, even though Wall Street rules usually require companies to report big losses much earlier.
At the end of the first quarter, MicroStrategy’s Bitcoin hoard was worth about $5.9 billion. When Bitcoin closed at around $18,900 on June 30, that same hoard, which included small purchases made at the end of June, was worth about $2.45 billion, or 58% less than it was just three months ago.
In a conference call on May 3, MicroStrategy’s president and chief financial officer, Phong Le, said, “We want to buy Bitcoin and hold it for the long term.” “We plan to hold on to our bitcoins for a long time, and we have no plans to sell them right now.”
In response to a request for comment, MicroStrategy’s senior director of treasury and investor relations, Shirish Jajodia, said that the company has no plans to sell its Bitcoin and that its shareholders agree with this decision. Jajodia said that MicroStrategy’s “robust capital structure” makes it safe from short-term changes.
