When MicroStrategy Inc. started buying Bitcoin in bulk in the summer of 2020, CEO Michael Saylor said it was because inflation would render money worthless. The block of crypto he has accumulated since then is worth $3.
billion less at the end of the second quarter compared to the previous quarter. Technically, this drop is another paper loss for the enterprise software maker under US accounting rules until one of the Bitcoins is sold, but there are consequences. MicroStrategy will likely incur a significant loss charge when it releases its second-quarter results. And for shareholders, the stock fell 66% in the quarter ended Thursday, surpassing Bitcoin's 59th cline.
Saylor dismissed any concerns, persisted with his strategy, and added to his stock last quarter as Bitcoin saw its biggest price drop in over a decade. At the end of June, MicroStrategy noted that it would report normal results by the end of the next quarter, although Wall Street regulators typically require companies to report large losses much earlier. MicroStrategy's bitcoin storage was worth about $5.9 billion at the end of the first quarter, which means that with the bitcoin price ending at around $18,900 on June 30, that same pile - including some transactions Small purchases announced at the end of June - worth about $2.
5 billion. , which is 58% lower than just three months ago.
“To reiterate our strategy, we look to buy and hold Bitcoin and for the long term,” Phong Le, president and chief financial officer of MicroStrategy, said on a May 3 conference call. "We view our bitcoin holdings as a long-term holding and currently have no plans to engage in a bitcoin sale."
Shirish Jajodia, director of investor relations and treasury at MicroStrategy, responded to a request for comment that the company has no plans to sell Bitcoin and that shareholders support its strategy. Mr Jajodia added: MicroStrategy is insulated from short-term fluctuations due to its "solid capital structure".
At the height of the crypto market crash, MicroStrategy bought another
80 bitcoins worth about $10 million between May 3 and June 28, at around $20,817 each. , according to a filing Wednesday with the U.S. Securities and Exchange Commission.
MicroStrategy CEO sees Bitcoin as the Future
Tysons Corner, the Va-based company. holding about 129,699 bitcoins purchased at an average price of about $30,665 per bitcoin, for a total purchase price of about $3.98 billion, according to Form 8-K filed Wednesday.
While a number of crypto-focused companies have also added Bitcoin to their balance sheets, the blows to digital assets and other coins that are entering the current bear market have ability to make any potential participant think twice before plunging in.
However, some digital asset advocates seem to remain indifferent to the recent long-term price collapse and Saylor's strategy.
"If you look at our price target on MicroStrategy, it's based on the Bitcoin price hitting 95,000," said Mark Palmer, head of digital asset research at BTIG, who has a buy rating on MicroStrategy. USD at the end of 202
" for $950. "Honestly, a lot can happen between now and 202
."
Shares of MicroStrategy ended the second quarter at $16
.30. The stock spiked to $1,272.9
in February 2021. It was trading at $123.92 at the end of July 2020, just before Saylor started buying Bitcoin.
“There will only be 21 million Bitcoins mined because there is a definite supply of Bitcoin,” Palmer said. “This means that the Bitcoin price will be determined by demand rather than the balance between supply and demand.”