Microstrategy sells Bitcoin for first time, loss hits $2 billion
Analytics software company Microstrategy purchased 2,395 bitcoins for $43 million in the depths of the industry’s chaos created by the FTX’s stunning collapse.
More interestingly though, the largest corporate Bitcoin holder sold 704 BTC for about $11.8 million on December 22. That was the first sale from its bitcoin stockpile since MicroStrategy began acquiring the primary cryptocurrency in 2020.
Citing tax purposes, the company said the transaction incurred a loss that would offset previous capital gains, thus it benefits the company in terms of tax liabilities. The sale was made at an average price of $16,776 per coin, net of fees and expenses.
“MicroStrategy plans to carry back the capital losses resulting from this transaction against previous capital gains, to the extent such carrybacks are available under the federal income tax laws currently in effect, which may generate a tax benefit,” the company wrote today in a filing with the United States Securities and Exchange Commission (SEC).
Two days later, MacroStrategy reversed the sale transaction with the purchase of 810 bitcoins for $13.6 million in cash, at an average price of $16,845 per bitcoin.
Shares of MicroStrategy tumbled nearly 50 percent in the last two months as investors fretted over what the collapse of Sam Bankman-Fried’s crypto empire would mean for the software company’s finances.
MicroStrategy, a maker of business-intelligence software, disclosed that it held 132,500 bitcoins as of December 27, which were acquired at a total cost of around $4.03 billion and an average purchase price of approximately $ 30,397 apiece.
With bitcoin currently trading at $16,590, MicroStrategy’s crypto stash would now be worth just over $2.19 billion. That translates to an unrealized loss of nearly $2 billion.
MicroStrategy turned to bitcoin in 2020 as a hedge against inflation. 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.
This strategy, however, turned out to be a risky gamble, with Bitcoin now moving in lockstep with other cryptocurrencies plunging amid fears of a prolonged ”crypto winter.” The question now is if this slide triggers a margin call that would force Saylor’s business intelligence firm to sell part of its holdings.
However, Microstrategy CEO, who expects the price of bitcoin to hit $6 million, said that the company will never sell its bitcoin holdings. The executive also revealed that he personally owns 17,732 bitcoins, noting that the primary cryptocurrency is “unstoppable” and will replace gold.