MicroStrategy posts modest $727,000 Bitcoin write-down charge
Important takeaways
- MicroStrategy reported $727,000 in impairment losses on its Bitcoin holdings in the third quarter of 2022.
- The company’s Bitcoin impairment losses were significantly higher in other periods and quarters.
- MicroStrategy has 130,000 BTC worth $2.5 billion and is the largest public company investing in Bitcoin.
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MicroStrategy reported a $727,000 impairment charge this quarter after losses on its Bitcoin holdings.
MicroStrategy faces minimal losses
MicroStrategy saw only small Bitcoin losses this quarter.
According to a press release on Tuesday, the company incurred only a “minimal bitcoin impairment” thanks to stable Bitcoin prices in the third quarter of 2022.
Those impairment losses amounted to just $727,000 in the three-month period ending September 30, 2022. By comparison, the company saw $65 million in impairment losses in the same three-month period in 2021.
MicroStrategy also reported $1 billion in impairment losses for the nine-month period ended September 30, 2022, and $684 million in impairment losses for the same nine-month period ended September 30, 2021.
Impairment is a special term used to describe the depreciation of an asset’s fair market value in accounting.
MicroStrategy noted that it has been encouraged by the Financial Accounting Standards Board’s recent Bitcoin guidelines on accounting issues. In October, the FASB announced that it would require companies to measure crypto assets at fair value – a change that would set clear accounting rules for institutional crypto investors.
MicroStrategy CFO Andrew Kang wrote that the company believes this will “improve the current unfavorable intangible accounting treatment” and “promote further institutional use of bitcoin as an asset class”
The company added that it is the largest listed corporate owner of Bitcoin, as it holds 130,000 BTC.
MicroStrategy originally acquired this amount for $3.98 billion in various purchases that began in August 2020. The stock is now worth $2.53 billion at current prices.
Of the total holdings, 301 BTC (currently worth $6.1 million) were purchased last quarter.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH and other digital assets.
