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Wednesday, July 06, 2022

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MicroStrategy logged a $170 million Bitcoin impairment loss in Q1 2022



  • The largest corporate Bitcoin holder recorded a Bitcoin impairment loss of $170.1 million in the first three months of 2022
  • Its latest Bitcoin addition was funded by a $205 million Bitcoin-backed loan.

The world’s largest enterprise Bitcoin hodler MicroStrategy on Tuesday released its first-quarter 2022 financials, revealing a total revenue of 119.3 million, down 2.9% on the year. 

A tough Q1

MicroStrategy also said it saw a cumulative impairment loss of $1.071 billion on its Bitcoin Strategy. In the three-month period ending March 31, during which Bitcoin dropped by 1.2%, the software intelligence firm held 129,218 BTC, which at the time had a total market value of $5.893 billion and a carrying value of $2.896 billion.

The company’s most recent purchases saw as many as 4,167 BTC tokens added to its portfolio. The corporate digital asset hodler purchased the tokens between February 18 and April 4 after taking a $205 million three-year loan backed by more than four times worth of Bitcoin ($820 million).

We also furthered our position as the leading public company investor in bitcoin through the issuance of our first bitcoin-backed term loan. We have demonstrated that our bitcoin can be productively used as collateral in capital raising transactions, which allows us to further execute against our business strategy,” said CEO Michael Saylor.

The Virginia-based firm also noted that non-GAAP (operational) expenses totalled $263.6 million in Q1 2022, of which $170.1 million was from impairment losses on Bitcoin holdings. This loss on the digital assets stood at $194.1 million in Q1 last year.

“Loss from operations for the first quarter of 2022 was $170.0 million, compared to $183.2 million for the first quarter of 2021. Net loss for the first quarter of 2022 was $130.8 million, or $11.58 per share on a diluted basis, as compared to $110.0 million, or $11.40 per share on a diluted basis, for the first quarter of 2021. Digital asset impairment charges of $170.1 million and $194.1 million for the first quarter of 2022 and 2021, respectively, were reflected in these amounts,” the release read.

Overall the operating expenses declined by 7% from the figures recorded last year at such a time.

Andrew Kang joins MicroStrategy 

MicroStrategy also revealed the appointment of Andrew Kang as the new CFO and senior executive VP. Kang, who previously held the same two roles at Greensky, boasts a wealth of experience in finance and capital markets. 

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