Bitcoin’s biggest public holder MicroStrategy to buy more BTC despite $690 million in impairment losses

Enterprise analytics and mobility software company MicroStrategy, which holds the highest number of bitcoins among public companies globally, will continue to buy the digital asset even as it reported impairment losses of $424.8 million during the second quarter of 2021. The cumulative impairment losses were $689.6 million since Q3 2020. As of June 30, 2021, the company held 105,085 bitcoins with a carrying value or book value of $2.051 billion. The average carrying amount per bitcoin was around $19,518. According to buybitcoinworldwide.com, Tesla followed by Galaxy Digital Holdings, Voyager Digital and Square were other leading public bitcoin holders having 42,902, 16,400, 12,260, and 8,027 bitcoins respectively.

“We continue to be pleased by the results of the implementation of our digital asset strategy. 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,” Michael J. Saylor, CEO, MicroStrategy said in a statement. The company views acquiring and hold bitcoin as a dependable store of value supported by a robust, public, open-source architecture untethered to sovereign monetary policy.

Also read: IMF warns against widespread crypto adoption; says its ‘most direct cost’ is to macroeconomic stability

As of June 30, 2021, the non-GAAP digital asset cost basis and non-GAAP calculation of the market value of MicroStrategy’s bitcoin were $2.741 billion and $3.653 billion, respectively that reflected an average cost per bitcoin of around $26,080 and a market price per bitcoin of $34,763.47. “MacroStrategy LLC, a subsidiary of MicroStrategy, holds approximately 92,079 of the bitcoins,” the company added. MicroStrategy’s net loss for the second quarter was $299.3 million vis-a-vis net income of $3.4 million, for the second quarter of 2020.

The company had reported in June this year that it raised $500 million in bond sale to buy more Bitcoins. “MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoin,” the company had said in a statement, underscoring the institutional interest in the world’s largest cryptocurrency despite recent price correction.

Last month, Elon Musk’s Tesla had also reported $23 million in impairment related to Bitcoin in its Q2 operating income following the digital currency’s price drop to $30,000-mark in June. Both Tesla and MicroStrategy consider bitcoin to be intangible assets. Hence, any decrease in their fair values below the companies’ asset values for digital currencies at any time will require them to record impairment. However, the losses might not impact Tesla since its investment was worth over billion dollars in bitcoin. The company’s operating income had increased 301 per cent jump to $1.3 billion from $327 million in Q2 2020. 

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