MicroStrategy Had $917M Impairment Charge on Bitcoin Three Months Ago — Now It's $727,000
But in a reflection of a challenging bear market, MicroStrategy snapped up just 301 BTC in the most recent quarter — a stark contrast to the 9,000 BTC it bought a year ago.
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MicroStrategy took a $727,000 impairment charge on its Bitcoin investment in the third quarter of 2022 — compared with $917.8 million three months ago.
The headline figure from the business intelligence firm's latest results reflect how BTC has become more stable following extreme downward volatility earlier this year.
But in a reflection of a challenging bear market, MicroStrategy snapped up just 301 BTC in the most recent quarter — a stark contrast to the 9,000 BTC it bought a year ago.
It's been almost a year since Bitcoin hit a new all-time high of $68,700 — and the value of MicroStrategy's substantial investment has fallen sharply since then.
Back in November 2021, the company had 114,000 BTC worth $7.5 billion. Fast forward to now, and it holds 130,000 BTC with a value of $2.65 billion.
The current valuation is far less than the $4 billion that MicroStrategy has paid for this crypto stash — funded partly through borrowing.
Intriguing Updates
President and CEO Phong Le, who recently succeeded Michael Saylor, told investors on an earnings call that the company is planning to develop Bitcoin Lightning software.
"We are in the initial stage of exploring innovative lightning applications for cybersecurity use cases to help enterprise customers through networks, monetize websites and deploy wallets en masse using Bitcoin."
Le went on to stress that MicroStrategy was in it for the long haul when it came to its Bitcoin investment.
"We have not sold any Bitcoin to date. To reiterate our strategy, we seek to acquire and hold Bitcoin for the long-term. And we do not currently plan to engage in sales of Bitcoin. We have a long-term time horizon and the core business is not impacted by the near-term Bitcoin price fluctuations."
He also insisted that MicroStrategy "have more than sufficient collateral" to meet obligations relating to its Bitcoin-backed loans — as $1.7 billion of its BTC warchest remains "unpledged and unencumbered."
Saylor, who is now the company's executive chairman, went on to point out that MicroStrategy's stock is outperforming "all of the major asset classes that we benchmark ourselves against" — beating tech stocks by gaining 116% since August 2020. Bitcoin is also up 72%.
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