The enterprise-software specialist is known to be the largest company holding bitcoins.
It’s a big surprise.
MicroStrategy, the company of Michael Saylor, one of the most fervent evangelists of Bitcoin, has sold the king of cryptocurrencies.
The move was made recently, according to a regulatory filing.
The firm said it bought approximately 2,395 bitcoins for approximately $42.8 million in cash, at an average price of approximately $17,871 per bitcoin, inclusive of fees and expenses, between November 1 and December 21.
The transaction was made at an average price of approximately $17,871 per bitcoin, inclusive of fees and expenses.
A day later, the firm sold approximately 704 bitcoins for cash proceeds of approximately $11.8 million, at an average price of approximately $16,776 per bitcoin, net of fees and expenses.
Given the average price of this last transaction, this means that MicroStrategy has lost money compared to previous transactions.
But the company said that it “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.”
Basically, the firm indicates that its decision to sell bitcoins was due more to tax reasons rather than a loss of confidence in bitcoin.
Impairment Charges Loom
Indeed, two days after the sale operation, MicroStrategy bought back bitcoins.
The firm acquired approximately 810 bitcoins for approximately $13.6 million in cash, at an average price of approximately $16,845 per bitcoin, inclusive of fees and expenses, on December 24, according to the same SEC filing.
At the end of this transaction, MicroStrategy has increased the number of bitcoins ultimately held by the company compared to the third quarter ended October 31. The company held 132,500 bitcoins as of December 27, up 2,500 compared to October 31.
The company acquired its bitcoins at an average price of approximately $30,397 per bitcoin, inclusive of fees and expenses, which means that it should announce asset write-downs because the price of bitcoin is currently at $16,485 per unit. It should announce BTC-related asset impairment charges during the publication of its fourth quarter earnings.
Indeed, MicroStrategy’s bitcoins are worth $2.2 billion at the current Bitcoin price, while they cost the company $4.03 billion in total.
MicroStrategy implemented its Bitcoin strategy in the third quarter of 2020, becoming the first established company to add digital currency to its balance sheet. The company has already repeated several times that it’s investing in Bitcoin for the long term. One of the consequences of this decision is that the group’s stock performance substantially reflects the direction of Bitcoin’s price, up or down.
MicroStrategy stock has thus lost almost 75% of its value this year, in line with the losses of the largest cryptocurrency in the world. Bitcoin prices are down 76.1% from their all-time high of $69,044.77 set on November 10, 2021, according to data firm CoinGecko.
Saylor, who stepped down as CEO last August after 33 years serving as the boss of MicroStrategy, tweeted that the company has increased its bitcoin holdings. He doesn’t talk about the sale.
“MicroStrategy has increased its #Bitcoin Holdings by ~2,500 #BTC. As of 12/27/22 @MicroStrategy holds ~132,500 bitcoin acquired for ~$4.03 billion at an average price of ~$30,397 per bitcoin,” the billionaire, who is now Chairman, hailed on Twitter.