MicroStrategy Registers a $170 Million Impairment Charge on Bitcoin in Q1

American business intelligence company MicroStrategy released its Q1 financial results in which it revealed a non-cash digital asset impairment charge of $170.1 million.

The company also revealed appointing Andrew Kang as its new Senior Executive Vice President and Chief Financial Officer, taking over Phong Le on or about May 9th, who will continue as the firm’s President.

• As of 31st March 2022, MicroStrategy held approximately 129,218 bitcoins originally acquired for $3.972 billion. The carrying value of $2.896 billion reflects cumulative impairment losses of $1.071 billion.
• The report further mentioned that the original cost basis and market value of the Michael Saylor-led firm’s Bitcoin holdings were $3.967 billion and $5.893 billion, respectively, as of March end. This essentially represented an average cost per Bitcoin of approximately $30,700 and a market price per BTC of $45,602.79, respectively.
• According to the current CFO, MicroStrategy does not have any plans to engage in sales and instead will continue to acquire and hold Bitcoin long-term. During the earnings call, Lee also stated,

“We had another active and successful quarter. We purchased $215 million of Bitcoin at an average purchase price of $44,645 per Bitcoin, net of fees and expenses. We have not sold any Bitcoin to date. We view our Bitcoin holdings as long-term holdings and we do not currently plan to engage in sales of Bitcoin. “

• MicroStrategy also raised $205 million from Silvergate Bank as an interest-only loan for a term of three years, collateralized by Bitcoin. The loan will mature on March 23, 2025.
• The company also said it “may conservatively explore future yield generation opportunities on unencumbered MacroStrategy bitcoins.”
• Earlier this year, US Securities and Exchange Commission (SEC) disapproved of MicroStrategy’s accounting adjustment. To reflect the regulator’s concern, the software company, in a filing, stated that it would remove the adjustment for impairment losses and gains on sales related to the cryptocurrency.