MicroStrategy’s Q1 2024: A Bitcoin Buying Spree Despite $53.1M Net Loss

MicroStrategy, a leading corporate Bitcoin (BTC) holder, reported a net loss of $53.1 million in Q1 2024, even as it continued to accumulate more Bitcoin. The loss was largely due to a $191.6 million digital asset impairment loss, a tenfold increase from the previous year.

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Despite a 5.5% drop in revenue compared to Q1 2023, reaching $115.2 million, the firm remains optimistic about its Bitcoin investments. Notably, MicroStrategy has not yet adopted the new digital asset fair value accounting standard, which would have accounted for Bitcoin’s 65% price rally during the quarter.

Under traditional accounting methods, MicroStrategy’s Bitcoin was valued at $5.07 million at $23,680 per Bitcoin. However, if the firm had used the fair value approach, the value would have been $15.2 billion.

MicroStrategy has been a vocal supporter of the new standard, having written to the Financial Accounting Standards Board (FASB) in May 2023. The FASB later amended its rules to require fair value reporting of digital assets for fiscal years after Dec. 15, 2024.

In the meantime, MicroStrategy, which has pivoted to become a “Bitcoin development company,” purchased an additional 122 Bitcoin for $7.8 million in April. The company now holds 214,400 Bitcoin, valued at $13.5 billion, with an average purchase price of $35,180.

To fund its Bitcoin acquisitions, MicroStrategy raised $1.5 billion through two convertible note debt offerings in Q1, marking its 14th consecutive quarter of adding more Bitcoin to its balance sheet.

Following the announcement, MicroStrategy’s stock (MSTR) fell 3.3% in after-hours trading. However, Bitcoin’s 65% price increase in Q1 sparked a significant rally in MicroStrategy’s stock, which surged over 170% to $1704 by the end of March. The stock has since corrected to $1,292.