Microstrategy buys another dip – $15 million more bitcoin added to treasury
MicroStrategy has purchased another $25 million of Bitcoin, adding to its massive cryptocurrency holdings during a sharp drop in the price.
According to an SEC filing, the Virginia-based business intelligence firm had added another 660 bitcoins to its strategic reserves between December 30, 2021, and January 31.
The latest purchase was made for around $25 million in cash at an average price of $37,865 per coin, inclusive of fees and expenses.
The analytics software maker, run by bitcoin bull Michael Saylor, has taken advantage of any price drop in Bitcoin to continue beefing up its investment in the world’s most-traded cryptocurrency.
With its most recent purchase, MicroStrategy holds an aggregate of 125,051 bitcoins, which were acquired at a total cost of around $3.78 billion and an average purchase price of approximately $30,200 apiece. At the current price, Microstrategy’s bitcoins are worth more than $4.6 billion.
MicroStrategy stock crashes
MicroStrategy has been trading under pressure amid strong sell-off in crypto markets and after an unfavorable accounting ruling by the Securities and Exchange Commission.
MicroStrategy (NASDAQ:MSTR) stock is falling faster than the crypto’s price, just as it outpaced bitcoin’s climb last year. At one point in January, it fell as much as 30% over two days before recovering nearly half of the losses as equity markets rebounded.
The stock lost nearly 70% of its value since it hit a record high above $1000 a year ago. Shares of business intelligence specialist and cryptocurrency investor have seen a monumental 800% during the period between October 2020 and February 2021 as bitcoin climbed.
MSTR crashed further after a SEC filing released last week told MicroStrategy it can’t strip out the volatile swings in bitcoin’s price from its unofficial non-GAAP accounting measures.
“We note your response to prior comment 5 and we object to your adjustment for bitcoin impairment charges in your non-GAAP measures. Please remove this adjustment in future filings,” the SEC said.
MicroStrategy has long urged that US accounting standards should be reconsidered to accommodate companies that hold cryptocurrencies on their balance sheets. Currently, MicroStrategy reports its cryptocurrency holdings as intangible assets, which are then impaired if the value dips. However, the value can never be revised upward if the crypto price increases.
For instance, the Nasdaq-listed firm posted a cumulative impairment loss of $754.7 million on its cryptocurrency holdings for 2021’s third quarter. Under the US generally accepted accounting principles, or GAAP, the original cost of MicroStrategy’s digital assets was $3.160 billion. But at September’s price, the company’s bitcoins were worth more than $7.09 billion. This means that MicroStrategy would have made nearly $4 billion in profit if all BTC holdings were sold at the time.
