MicroStrategy buys another BTC and posts mixed results in Q4 2021


MicroStrategy buys another BTC and posts mixed results in Q4 2021


As expected, MicroStrategy, under the impetus of its CEO Michael Saylor, who has become an evangelist for bitcoin as a reserve financial asset since the summer of 2020, has benefited from the fall in the price of BTC. The company, whose primary business is publishing business intelligence software, almost forgot about it, purchased an additional 660 bitcoins at the end of the year for $25 million, or an average price of $37,865 per unit.

 

As of 1 February, according to the filing with the Securities and Exchange Commission (SEC), the company holds 125,051 BTC acquired for an average of $30,200 per unit.

If MicroStrategy remains faithful to its purchase policy consisting of a sort of DCA (regular purchase of bitcoins to smooth out the entry price), its latest acquisition seems relatively modest compared to its previous purchases. Purchases that may have climbed, as in November, to several thousand units.

 

A more cautious BTC purchase a policy?

A sign perhaps of a notable prudence in the face of a market slowdown that has more or less led to a drop in the company's share price, which has fallen by around 34% over the past month. The company has literally become a Bitcoin fund in itself. Indeed, given the number of BTC accumulated and as Michael Saylor invites them to do, investors wishing to gain exposure to the first cryptocurrency have the possibility to invest in MSTRs. A cheaper alternative to Bitcoin futures ETFs, he says.

Remember that there are not only these SEC-stamped ETFs as an investment possibility, other stock market products based on a basket of shares of companies holding BTC in their balance sheet or generating revenues from it, exist. For example, the Melanion Capital ETF traded in Paris or the Volt Equity fund in the US. MicroStrategy's products rank alongside mining companies and Tesla, which, after selling 10% of its holdings in early 2021, is content to keep its bitcoin bag.

 

A mixed fourth quarter for MicroStrategy.

But the strategy of regular BTC purchases is not without risk. For example, the company, which just released its Q4 2021 results, reported $146.6 million in bitcoin-related impairment charges. For the year as a whole, impairment charges reached $830.6 million, while in 2020 they were only $70.7 million. In fact, while the company spent $3.8 billion to buy bitcoins, its holdings for 2021 are only $2.9 billion, a cumulative impairment charge of $901 million.

Despite its opposition to accounting rules that it believes are ill-suited to an asset such as bitcoin, MicroStrategy appears to have complied with the calculation method recommended, or rather ordered, by the SEC. That is, to record the value of BTC at its purchase cost and only adjust it in the balance sheet if the price has depreciated. Any increase in value cannot be considered until the asset has been sold.

 

What does the future hold for MicroStrategy?

On the earnings call, CFO Phong Le warned that he expected the first quarter of 2022 to be even less successful. But far from abandoning the accounting duel with the SEC, MicroStrategy will continue to work with other companies to develop "a more appropriate accounting framework for digital assets.

As for concerns about debt incurred for its repeated purchases of bitcoins, the company is reassuring. Phong Le said the company could withstand any headwinds as the first maturities will not arrive until December 2025.

Indeed, and not surprisingly, holding bitcoins on the balance sheet remains and will remain a priority for MicroStrategy, which is now thinking about making a profit on its investment. However, the expansive CEO has not yet specified the possible options. They will undoubtedly be specified very soon to reassure investors has benefited from the fall in the price of BTC. The company, whose primary business is publishing business intelligence software, almost forgot about it, purchased an additional 660 bitcoins at the end of the year for $25 million, or an average price of $37,865 per unit.

As of 1 February, according to the filing with the Securities and Exchange Commission (SEC), the company holds 125,051 BTC acquired for an average of $30,200 per unit.

If MicroStrategy remains faithful to its purchase policy consisting of a sort of DCA (regular purchase of bitcoins to smooth out the entry price), its latest acquisition seems relatively modest compared to its previous purchases. Purchases that may have climbed, as in November, to several thousand units.

 

Read more...

👉12% of the global capitalization of cryptos would be in Russian hands


A more cautious BTC purchase a policy?

A sign perhaps of a notable prudence in the face of a market slowdown that has more or less led to a drop in the company's share price, which has fallen by around 34% over the past month. The company has literally become a Bitcoin fund in itself. Indeed, given the number of BTC accumulated and as Michael Saylor invites them to do, investors wishing to gain exposure to the first cryptocurrency have the possibility to invest in MSTRs. A cheaper alternative to Bitcoin futures ETFs, he says.

Remember that there are not only these SEC-stamped ETFs as an investment possibility, other stock market products based on a basket of shares of companies holding BTC in their balance sheet or generating revenues from it, exist. For example, the Melanion Capital ETF traded in Paris or the Volt Equity fund in the US. MicroStrategy's products rank alongside mining companies and Tesla, which, after selling 10% of its holdings in early 2021, is content to keep its bitcoin bag.

 

A mixed fourth quarter for MicroStrategy.

But the strategy of regular BTC purchases is not without risk. For example, the company, which just released its Q4 2021 results, reported $146.6 million in bitcoin-related impairment charges. For the year as a whole, impairment charges reached $830.6 million, while in 2020 they were only $70.7 million. In fact, while the company spent $3.8 billion to buy bitcoins, its holdings for 2021 are only $2.9 billion, a cumulative impairment charge of $901 million.

Despite its opposition to accounting rules that it believes are ill-suited to an asset such as bitcoin, MicroStrategy appears to have complied with the calculation method recommended, or rather ordered, by the SEC. That is, to record the value of BTC at its purchase cost and only adjust it in the balance sheet if the price has depreciated. Any increase in value cannot be considered until the asset has been sold.

 

What does the future hold for MicroStrategy?

On the earnings call, CFO Phong Le warned that he expected the first quarter of 2022 to be even less successful. But far from abandoning the accounting duel with the SEC, MicroStrategy will continue to work with other companies to develop "a more appropriate accounting framework for digital assets.

As for concerns about debt incurred for its repeated purchases of bitcoins, the company is reassuring. Phong Le said the company could withstand any headwinds as the first maturities will not arrive until December 2025.

Indeed, and not surprisingly, holding bitcoins on the balance sheet remains and will remain a priority for MicroStrategy, which is now thinking about making a profit on its investment. However, the expansive CEO has not yet specified the possible options. They will undoubtedly be specified very soon to reassure investors.

Post a Comment

If you like the post, please share it with your friends. Comment on the post. If you like the posts on this site, subscribe.

Previous Post Next Post