Despite a $1.3B paper loss, MicroStrategy claims it has no plans to cease trading bitcoin.
The business reported a $34 million loss on its first-ever Bitcoin sale last quarter, but said it did so to generate a tax loss.
MicroStrategy, a software analytics company, reported a paper loss on its Bitcoin holdings of over a billion dollars in 2022, but the company insists it has no intentions to cease trading the virtual currency.
On February 2, MicroStrategy disclosed its Q4 and year-end financial results for 2022, revealing that the reported impairment charges on its BTC holdings, net of gains on sale, were close to $1.3 billion for the entire 2022 financial year.
Despite the apparent losses, MicroStrategy’s CFO, Andrew Kang, stated during the company’s earnings call on February 2:
“We may consider pursuing additional transactions that may take advantage of the volatility in Bitcoin prices, or other market dislocations that are consistent with our long-term Bitcoin strategy.”
The success of Bitcoin is the most significant benchmark, according to MicroStrategy co-founder Michael Saylor, who stated this during the conference call. The company monitors its stock performance against “a variety of other benchmarks.”
Saylor said that MicroStrategy had “been able to outperform Bitcoin as an index” over the course of the period when the company initially disclosed that it was purchasing Bitcoin in August 2020.
He noted that although Bitcoin has increased by 98% from August 2020, the company’s stock has increased by 117%. He added:
“The only real safe haven for an institutional investor is Bitcoin. Since Bitcoin is the only digital commodity that is accepted by everyone, it serves as your safe haven if you’re an investor.
According to Kang, as of December 31, 2022, MicroStrategy controlled a total of 132,500 BTC, valued at $1.84 billion. Of that, the company controlled 14,890 BTC on its own behalf; the remainder BTC were held through its subsidiary MacroStrategy LLC.
For the first time, the business sold some of its Bitcoin holdings late last year. Kang said that the company “raised our net holdings by 2500 Bitcoin throughout the quarter” despite the sale of the 704 BTC, which was done to realise a tax loss of almost $34 million.
According to reports, MicroStrategy’s total sales for the fourth quarter exceeded Wall Street projections and came in at $132.6 billion.
At the time of writing, MicroStrategy’s stock price had fallen over 4% in after-hours trading, according to Yahoo Finance data.