MicroStrategy (MSTR) bought 8,813 bitcoins during 2022’s major crypto dip, taking a $1.28 billion impairment loss for the year, the company said in its fourth quarter report on Thursday.
As of December 31, the company had spent a total $3.9 billion to acquire 132,500 bitcoins purchased at an average price of $30,137.
The company’s carrying value of its bitcoin holdings at quarter’s end was $1.8 billion. As of Thursday afternoon’s bitcoin price, MicroStrategy’s stash was worth $3.16 billion.
Shares of MicroStrategy were down as much as 3% in after hours trade on Thursday. Shares had gained more than 9% during normal trading hours on Thursday, and the stock has more than doubled so far this year.
In the fourth quarter, the business intelligence software company reported revenue of $132.6 million, just beating the $131 million expected by analysts, according to data from Bloomberg.
MicroStrategy reported a net loss for the fourth quarter of $249.7 million.
“Our corporate strategy and conviction in acquiring, holding, and growing our bitcoin position for the long term remains unchanged,” said MicroStrategy CFO Andrew Kang.
MicroStrategy took a $197.6 million impairment charge for the fourth quarter on its bitcoin holdings, bringing its cumulative impairment charges related to bitcoin to $2.15 billion.
The company’s founder and Executive Chairman Michael Saylor has said previously that buying bitcoin has raised its public profile. Saylor stepped down in August from his role as CEO to focus on the company’s bitcoin strategy and related bitcoin advocacy initiatives.
To buy bitcoin, MicroStrategy has issued corporate debt, convertible bonds, equity, and taken out a loan with some of its bitcoin.
During the quarter, the company issued $46.2 million worth its stock, and as of December 31, MicroStrategy had around $450 million available for sale under its current authorizaton.
Over its fourth quarter, MicroStrategy also sold bitcoin for the first time, harvesting its losses to offset capital gains tax, according to an SEC filing.
The company’s massive bitcoin write downs have also brought attention to how cryptocurrencies should be reported on a public corporation’s balance sheet.
By current standards, crypto holdings must be recorded as intangible assets: when prices fall, the value must be written down to the lowest price point for the period. Alternatively, those assets can’t be marked up when prices rise until they are sold.
The treatment will likely change by the end of 2024 according to Financial Accounting Standards Board (FASB), which voted Wednesday to issue a proposal for public comment by late March that would have corporates value some crypto at fair value like stocks.
