MicroStrategy announced its Q1 2024 financial report today, revealing a net loss of $53.1 million after accounting for a $191.6 million Bitcoin impairment charge. Additionally, Michael Saylor announced that the company had added 122 BTC to its holdings in April, bringing the total number of Bitcoins held to 214,400.
Background:
MicroStrategy, the dominant holder of Bitcoin among US listed companies, has been one of the biggest winners of the Bitcoin bull market, with its stock price surging over 88.7% this year.
However, in its Q1 2024 financial report released today, the company reported a net loss of $53.1 million, which includes a $191.6 million “digital asset impairment expense” related to Bitcoin. Q1 revenue also declined by 5.5% compared to the same period last year, reaching $115.2 million.
Q1 financial report does not include billions in Bitcoin gains
It is worth noting that MicroStrategy did not adopt the new accounting standards for digital assets in its Q1 financial report, therefore the billions of dollars in gains from Bitcoin’s over 65% surge in the first quarter were not included in its net income.
The company stated that it still used the old accounting standards at the end of Q1, valuing its Bitcoin holdings at $5.074 billion, with a book value of $23,680 per coin, reflecting a depreciation loss of $2.461 billion since the purchase. However, if calculated based on Bitcoin’s closing price of $71,028 in March, the total market value of its Bitcoin holdings reached $15.2 billion.
In December last year, the Financial Accounting Standards Board (FASB) officially updated the accounting standards for cryptocurrencies, allowing companies to use “fair value” to account for certain cryptocurrencies held on their balance sheets and include changes in fair value in net income, instead of only using the original purchase price and recording cumulative “impairment” expenses. MicroStrategy co-founder Michael Saylor praised this move as a catalyst for global companies to hold Bitcoin as a reserve asset.
MicroStrategy’s CFO stated during the earnings call that the company has fully planned to adopt the new digital asset fair value accounting rules and is currently evaluating the best timing for doing so. The new FASB cryptocurrency accounting standards will officially take effect on December 15th this year, but allow companies to adopt them earlier.
Further reading:
US accounting standards update allows cryptocurrency “fair value” accounting; Michael Saylor praises it as a positive for companies holding Bitcoin
MicroStrategy adds another 122 Bitcoins to its holdings, bringing the total to 214,400
Alongside the release of its Q1 financial report, Michael Saylor also announced today that the company had added $78 million in April to purchase 122 BTC, bringing the total number of Bitcoins held to 214,400. Based on the current value of Bitcoin at $63,628, the total value reached $13.6 billion, with an average purchase price of $35,180 per coin, meaning the unrealized gain from its Bitcoin holdings reached $6.1 billion.
Although the company continues to make purchases, the buying momentum in April has significantly decreased compared to previous months. President and CEO of MicroStrategy, Phong Le, commented in the financial report:
Following the announcement of the financial report, MicroStrategy’s stock price (MSTR) fell 2.47% in after-hours trading, closing at $1,261, down over 32% from the intra-year high of $1,919.16 in late March.
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