Strategy books $8.2 billion Q2 loss on bitcoin price decline
MicroStrategy reported an $8.2 billion quarterly loss primarily due to an unrealized markdown on its massive bitcoin holdings. Despite the loss, the company is diversifying its business model by establishing a 'Digital Credit' asset class and adjusting its long-standing bitcoin accumulation strategy.
Why it matters
The company's significant exposure to bitcoin makes its financial health a bellwether for institutional crypto-investment strategies and corporate treasury management.
The quarterly loss was driven almost entirely by an $8.32 billion unrealized markdown on its bitcoin holdings under fair-value accounting.
The company held 843,775 bitcoin as of July 26, up 25% from the start of the year. At current prices, the stash is worth roughly $54.8 billion, compared with an acquisition cost of $63.7 billion.
The report came after a period of growing investor scrutiny on the firm over whether it can sustain an increasingly complex capital structure built around multiple classes of preferred stock, common equity and convertible debt.
The company raised $17.06 billion through at-the-market stock offerings this year, repurchased $1.5 billion of convertible notes at an 8% discount and expanded its U.S. dollar reserve to $3.75 billion, enough to cover more than two years of preferred dividend payments and interest expenses.
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