MicroStrategy Has Acquired Over 100,000 Bitcoins, And It Doesn't Plan To Stop Despite $400M Impairment Loss

Virginia-based software company MicroStrategy Incorporated MSTR now holds over 105,000 Bitcoin BTC/USD.

What Happened: In an earnings announcement, the company announced that it was pleased by the results of its digital asset strategy, which has involved raising capital to acquire even more Bitcoin over the past few months.

“Our latest capital raise allowed us to expand our digital holdings, which now exceed 105,000 bitcoins. Going forward, we intend to continue to deploy additional capital into our digital asset strategy,” said the company.

Why It Matters: A large sum of MicroStrategy’s recent Bitcoin purchases has been significantly higher than Bitcoin’s prevailing market price. As a result, accounting rules under the Generally Accepted Accounting Principles (GAAP) require the company to report an impairment loss when the asset’s price falls below its cost basis.

MicroStrategy reported a $424.8 million impairment loss on its Bitcoin holdings for the second quarter of 2021. This impairment loss on Bitcoin represented over 80% of the firm’s reported operating expenses which stood at $516.6 million in Q2.

MicroStrategy’s cumulative impairment losses on Bitcoin exceeded $689 million since it first began acquiring the leading digital asset.

The company’s shares have appreciated significantly since it first began allocating some of its treasury reserves to the leading digital asset.

MicroStrategy Performance
Jul. 27, 2021

Since the start of their #Bitcoin treasury program:$MSTR +406%$BTC +227%$NASDAQ +39.1% pic.twitter.com/Ti5Hr3PlOH

— ecoinometrics (@ecoinometrics) July 27, 2021

MicroStrategy is now on the lookout for a CFO to complement its newly adopted corporate strategy of acquiring and holding Bitcoin.

Price Action: At press time, Bitcoin was trading at $39,087, losing 4.17% over the past 24-hours. MicroStrategy ended Thursday’s session 3.35% lower, closing at a price of $625 per share.