MicroStrategy promises to buy more BTC in the second quarter despite the paper loss of its $ 424.8 million inventory
Business intelligence and mobile software company MicroStrategy has pledged to buy more Bitcoin after reporting $ 424.8 million in impairment losses in the second quarter.
However, this is just a paper loss based on the price of Bitcoin at the end of the quarter and does not reflect a realized loss. Depending on how you add up the numbers, it seems that MicroStrategy made almost a billion dollars more from Bitcoin than it spent.
Coupled with CEO Michael Saylor’s ardent belief in Bitcoin, this may be why it was decided to add more Bitcoin to its reserves in the future. The report said:
“We are still pleased about the results of the implementation of our digital asset strategy. With our most recent capital increase, we were able to expand our digital portfolio to over 105,000 bitcoins. We intend to continue to use additional capital in our digital asset strategy in the future. “
The Q2 report was announced earlier today. As of June 30, 2021, MicroStrategy held approximately 105,085 BTC with a book value of $ 2.051 billion on an impairment loss of $ 689.6 million since the acquisition. The average book value per bitcoin was estimated to be $ 19,518.
Earlier this week, Elon Musk’s Tesla also released a Q2 report that showed an impairment loss of $ 23 million on its Bitcoin holdings.
Because both companies categorize Bitcoin as an “intangible asset,” accounting rules mandate that they must report an impairment loss if the asset’s price falls below its cost base. However, you are not required to report an increase in the price of the specified asset until the position is realized through a sale.
The digital asset numbers were calculated using Generally Accepted Accounting Principles (GAAP) – a set of generally accepted accounting standards for financial reporting. The company also submitted non-GAAP calculations that exclude the “effects of stock-based compensation expenses and impairment losses and capital gains on intangible assets” in this report.
Report: That’s how much the tweets from Musk and Saylor had an impact on crypto prices in the second quarter
The non-GAAP numbers paint a different picture for MicroStrategy’s digital asset holdings, with the BTC cost base at $ 2.741 billion, but market value at $ 3.653 billion, for an average cost per BTC of 26,080 And a market price of $ 34,763 as of June 30th.
July 27, 2021
Since the start of their #bitcoin treasury program: $ MSTR + 406% $ BTC + 227% $ NASDAQ + 39.1% pic.twitter.com/Ti5Hr3PlOH
– Econometrics (@ecoinometrics) July 27, 2021
Total revenue for the second quarter was $ 125.4 million, an increase of 13.4% over the second quarter of 2020. Microstrategy gross profits were $ 102.3 million, representing a gross margin of 81.6%, a slight increase of 4.2% over the previous year. Overall, MicroStrategy posted a loss of $ 299.3 million for the second quarter, compared to a profit of $ 3 million for the year-ago quarter.
Saylor and MicroStrategy appear to be all in Bitcoin at this stage, and both have continued to amass the asset despite the crypto downturn that started in May as the strategy is to hold the asset for the long term. However, the CEO recently stated that if the price of Bitcoin is lower in four years than it is today, he will rethink his strategy.
MicroStrategy announces financial results for the second quarter of 2021.
Join @ MicroStrategy management to discuss the $ MSTR results in our live video webinar today at 5:00 p.m. EDT. Https://t.co/Qch83Rj0GW
– Michael Saylor (@michael_saylor) July 29, 2021