MicroStrategy’s Bitcoin Conviction Is ‘Strong’ As It Post Q1 Profit

by · May 2, 2023

Business intelligence platform MicroStrategy has reiterated its commitment to its Bitcoin (BTC) investment strategy after achieving its first quarterly profit since 2020.

The Michael Saylor-founded firm returned to the green in the first quarter of 2023 with a profit of $94 million, which was largely attributed to a one-time tax benefit of $453.2 million.

In addition to the tax benefit, the firm collected $121.9 million in revenue, up 2.2% from the same time last year.

Phong Lee, the firm’s CEO, explained in the May 1 statement that MicroStrategy’s “conviction” in its Bitcoin (BTC) investment strategy is as “strong” as ever:

“The conviction in our Bitcoin strategy remains strong as the digital asset environment continues to mature.”

“We remain disciplined on costs while investing in growth, and we will continue to execute our dual strategy of growing our business intelligence software business and acquiring Bitcoin for the future,” he added.

Lee also emphasized that its “core business” is not affected by short-term BTC price fluctuations.

Saylor, who serves as MicroStrategy’s chairman, attributed the successful quarter to sharp execution of the firm’s core business model and Bitcoin investment mission, which he described as the “right strategy,” adding:

“So at the end of the day, it’s not easy to see what better strategy there might be. So we’re strong supporters of a Bitcoin strategy. And as you can see from this chart, just acquiring and holding Bitcoin at a reasonable way a pretty good way to outperform the market.”

The Bitcoin advocate predicted that investors will soon exit their positions in cryptoassets that are “under scrutiny in the regulatory environment,” which in turn will “flow into Bitcoin.”

MicroStrategy CFO Andrew Kang added that the firm also managed to reduce leverage by repaying its $161 million Bitcoin-backed loan from the now-collapsed Silverage Bank:

“By retiring the debt, we also released all Bitcoin that was pledged as collateral to secure the loan. This was an important and strategic transaction for us and our liability management goals.”

According to previous SEC filings, the business intelligence firm bought 7,500 BTC in Q1 over two purchases on March 23 and April 5 for a total of $179 million.

MicroStrategy’s Bitcoin Accumulation by Quarter. Source: MicroStrategy

The firm now has 140,000 BTC, which were collectively purchased at an average price of around $29,803.

The firm’s turn to profit comes as BTC managed to rise 72% during the first quarter to around $28,300.

Related: MicroStrategy’s share price will more than double in 2023 in line with Bitcoin

With the price of BTC currently at $28,100, MicroStrategy is down about 5.7% on its Bitcoin investment.

However, the firm was in the “green” for a period last month as BTC soared to its most recent high of $30,980 on April 15.

The software analytics firm began investing its cash reserves in BTC on March 5, 2021, when it bought 91,064 BTC – 65% of its total holdings today.

Saylor recently revealed that MicroStrategy integrated Bitcoin Lightning into its corporate email address.

The Bitcoin-savvy firm is also developing a Bitcoin layer-2 Lightning Network-based Software as a Service tool for companies.

Blade: Magazine: Bitcoin in Senegal: Why is this African country using BTC?