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MicroStrategy’s Bitcoin Impairment Swells to $147 Million in Q4 2021


The world’s largest corporate bitcoin holder MicroStrategy has reported a $146 million write-down on its investment in digital assets. MicroStrategy Loses $147 Million in Impairment The day after MicroStrategy CEO Michael Saylor announced that his company had purchased 660 BTC worth $25 million, the company reported a $146.6 million loss in impairment due to its bitcoin investment. holdings. MicroStrategy, maker of business intelligence software, said so in its fourth quarter 2021 financial results on Feb. 1. MicroStrategy’s CFO Phone Le said during an earnings call on Tuesday that the company expected the impairments to be significant given the increased volatility of bitcoin. MicroStrategy stocks are down about 33% since the beginning of the year, attributed to the declining crypto market and concerns about high depreciation. Shares of the enterprise software maker have surged triple-digit in 2020 since it began buying bitcoin as a business strategy. In addition, MSTR tapped a new ATH of more than $1,000 per share last year. The SEC’s Request Recently, the SEC asked MicroStrategy to waive non-GAAP rules or unofficial accounting adjustments that would not disclose the exact impairment. Instead, it would say how much its earnings would have been if the impairment had not occurred. Following the SEC’s objection, MicroStrategy responded that it would make appropriate changes to its financial reporting. Le said the company is now trying to “determine a more appropriate accounting framework for digital assets.” What is an impairment loss? Impairment is an accounting practice that aims to determine the difference between the price at which the underlying asset was purchased and its exact value at the time of financial reporting. The difference must only be reported when the value of the asset decreases. In the case of valuation, the difference does not have to be reported until it has been sold. MicroStrategy’s Bitcoin Stash MicroStrategy’s current bitcoin holding is 125,051 BTC worth $3.78 billion, bought at an average price of $30,200. Bought as a treasury hedge, MicroStrategy began collecting bitcoin in August 2020. It almost set a trend for other institutional companies like Tesla to put bitcoin on their balance sheets. SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and get $100 Free and 10% Off Fees on Binance Futures First Month (Terms and Conditions). PrimeXBT Special Offer: Use this link to register and enter POTATO50 code to get 25% off trading fees.
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