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The company started buying Bitcoin in August 2020 to use it as a treasury hedge instead of the US Dollar and has since been instrumental in bringing Bitcoin to institutional corporations and public companies including the likes of Tesla and SpaceX.
MicroStrategy Incorporated (NASDAQ: MSTR) has released its financial results for the fourth quarter (Q4) of its 2021 fiscal year, announcing a $146.6 million net loss as a result of impairment charges on its Bitcoin holdings. The high impairment losses pushed the largest independent publicly-traded business intelligence company’s operational expenses up 125% to $248 million in the first quarter of this year, compared to the same quarter last year.
MicroStrategy has now lost almost a billion dollars ($901 million) in impairment charges on its BTC holdings over the last six quarters. The fortune 500 company boasts of a strong Bitcoin reserve that currently holds a total of 125,051 BTC acquired for about $3.78 billion at an average price of $30,200 per Bitcoin.
Microstrategy is one of the earliest companies to purchase Bitcoin and a pioneer in kick-starting the new wave of institutional interest in Bitcoin and other cryptocurrencies. The company started buying Bitcoin in August 2020 to use it as a treasury hedge instead of the U.S. Dollar and has since been instrumental in bringing Bitcoin to institutional corporations and public companies including the likes of Tesla and SpaceX.
The company’s impairment losses of $146.6 million were the third greatest, accounting for 25% of its BTC acquisition in the same period. The most significant impairment loss occurred in the second quarter of 2021 when it lost about 80% of the total BTC value purchased in that quarter. MicroStrategy recorded a net loss of $90 million or $8.43 per share on a diluted basis in the fourth quarter.
MicroStrategy opted to incorporate BTC impairment charges after the US Securities and Exchange Commission (SEC) rejected its ‘non-GAAP’ Bitcoin accounting methods. The SEC requested that the business intelligence firm include share-based compensation expenses, as well as impairment losses and gains on sale.
“2021 was another transformational year for MicroStrategy. Our software business returned to positive revenue growth for the first time since 2014, highlighted by our enterprise analytics business delivering another strong quarter as we saw growing adoption of the MicroStrategy platform, especially in the Cloud,” CEO of MicroStrategy, Michael Saylor stated after the Q4 announcement.
Saylor added that the company will also expand its already impressive bitcoin holdings significantly in the quarter and are looking to add over 10,300 BTC to the company’s holdings after successfully raising capital in the quarter through our at-the-market equity offering.
“Today, MicroStrategy is the world’s largest publicly traded corporate owner of bitcoin with over 125,000 bitcoins. We will continue to evaluate opportunities to raise additional capital to execute on our bitcoin acquisition strategy,” he stated.
MicroStrategy’s total revenues were $134.5 million, up 2.4 percent from the fourth quarter of 2020, or 4.4 percent in non-GAAP constant currency terms. Product licenses and subscription services revenues also shot up to $44.4 million, a 15.1% increase from the fourth quarter of 2020, or 18.3 percent on a non-GAAP constant currency basis.