Microstrategy lost $146M to Bitcoin impairment charges in Q4 2021

Microstrategy lost $146M to Bitcoin impairment charges in Q4 2021

MicroStrategy, the fortune 500 company with a 125,051 Bitcoin (BTC)-strong treasury, announced its Q4 2021 financial results on Feb. 2.

The institutional software solution provider reported a net loss of $146.6 million incurred in impairment charges on its Bitcoin holdings. The high impairment losses ded to the company’s operating expenses which saw a 125% increase at $248 million as compared to the same quarter last year.

An impairment loss is a recognized reduction in the acquisition cost of an asset that is triggered by a decline in its fair value. When the fair value of an asset declines below its purchase amount, the difference is written off.

The firm has lost nearly a billion dollars ($901 million) in impairment charges on its BTC holdings over the last six quarters. 

MicroStrategy decided to d BTC impairment charges after the U.S. Securities and Exchange Commission (SEC) rejected its existing ‘non-GAAP’ Bitcoin accounting methods. SEC asked the business intelligence firm to d share-based compensation expense and impairment losses and gains on sale.

The impairment losses of $146.6 million were the third-highest for the company where it accounted for 25% of its BTC purchase in the same quarter. The highest impairment loss came in the second quarter of 2021 where it lost about 80% of the total BTC value purchased in that quarter. MicroStrategy recorded a net loss of $90 million or $8.43 per share on a diluted basis in Q4.

Related: MicroStrategy buys the dip by purchasing 660 Bitcoin for $25M

MicroStrategy currently holds a total of 125,051 BTC acquired for about $3.78 billion at an average price of $30,200 per Bitcoin. 

Microstrategy started buying Bitcoin in August 2020 to use it as a treasury hedge inste of the U.S. Dollar. The firm has been instrumental in bringing Bitcoin to institutional firms and public companies including the likes of Tesla and SpaceX.

ARTICLE: Microstrategy lost $146M to Bitcoin impairment charges in Q4 2021
PUBLISHED: 2022-02-02 08:45:05 
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