MicroStrategy, the leading corporate holder of Bitcoin, experienced a net loss of $53.1 million in the first quarter of 2024. Despite this, the company continued to increase its Bitcoin holdings in April.
The net loss was largely due to a digital asset impairment loss of $191.6 million, which was ten times higher than the previous year. Additionally, revenue dropped by 5.5% compared to the first quarter of 2023, amounting to $115.2 million, according to MicroStrategy’s Q1 results filing.
Interestingly, MicroStrategy has not yet adopted the new digital asset fair value accounting standard, which would have taken into account the 65% increase in the fair value of Bitcoin during the quarter. Consequently, the company’s carrying value of Bitcoin was recorded at $5.07 billion using the traditional accounting method, based on a price of $23,680 per Bitcoin. However, if the fair value approach had been applied, the carrying value would have been $15.2 billion.
Despite advocating for the adoption of the new standard in a letter to the Financial Accounting Standards Board (FASB) in May 2023, MicroStrategy’s pleas were not immediately heeded. It was only seven months later that the 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, valued at $13.5 billion. The average purchase price of these holdings was $35,180. To fund these acquisitions, the company raised $1.5 billion through two convertible note debt offerings in Q1.
MicroStrategy’s commitment to Bitcoin has remained steadfast, with the first quarter of 2024 marking the 14th consecutive quarter in which the company has added more Bitcoin to its balance sheet, as stated by Phong Le, MicroStrategy’s president and CEO.
Following the announcement of the net loss, MicroStrategy’s stock experienced a decline of 3.3% in after-hours trading, according to Google Finance. This is in contrast to the impressive rally the company experienced in the first quarter, where its stock surged over 170% to $1704 by the end of March. However, the stock has since fallen to $1,292.
MicroStrategy’s journey reflects the volatile nature of the cryptocurrency market, with Bitcoin’s price fluctuations impacting the company’s financial performance. Nonetheless, MicroStrategy remains committed to its Bitcoin strategy, aligning with the growing interest in cryptocurrencies among hip hop stars and others in the industry.