MicroStrategy, the largest corporate holder of Bitcoin (BTC), experienced a net loss of $53.1 million in the first quarter of 2024. Despite this loss, the company continued to accumulate more Bitcoin in April. The net loss was primarily due to a digital asset impairment loss of $191.6 million, which was ten times higher than the previous year. Additionally, the company’s revenue decreased by 5.5% compared to the first quarter of 2023, reaching $115.2 million.
Interestingly, MicroStrategy has not yet adopted the new digital asset fair value accounting standard, which would have accounted for the 65% increase in the fair value of Bitcoin during the quarter. As a result, the company’s carrying value of Bitcoin was marked at $5.07 million using the traditional accounting method, instead of $15.2 billion if the fair value approach had been taken.
Despite this, MicroStrategy had previously expressed support for the new accounting standard and had written a letter to the Financial Accounting Standards Board (FASB) in May 2023. Eventually, FASB amended its rules to mandate fair value reporting of digital assets for fiscal years after December 15, 2024.
In April, MicroStrategy purchased an additional 122 Bitcoin for $7.8 million, bringing its total holdings to 214,400 Bitcoin worth $13.5 billion. The company raised $1.5 billion from two convertible note debt offerings in the first quarter to acquire more Bitcoin, marking its 14th consecutive quarter of adding to its balance sheet.
Following the announcement of the net loss, MicroStrategy’s stock fell 3.3% in after-hours trading. While Bitcoin’s 65% increase in value had initially caused a significant rally for MicroStrategy in the first quarter, with the stock surging over 170% to $1704 by the end of March, the stock has since declined to $1,292.