US MicroStrategy Posts 25 Billion Yen Impairment Loss on Bitcoin Holdings

Fourth Quarter 2022 Earnings Report

Micro Strategy, a business intelligence company listed on the US Nasdaq, announced its financial results for the fourth quarter of 2022 (October to December) on the 2nd. In 4Q, the company posted an impairment loss of approximately 25.4 billion yen ($197.6 million) on Bitcoin (BTC) held as a financial asset.

As of December 31, 2022, MicroStrategy holds approximately 132,500 Bitcoins with a book value of approximately ¥237 billion ($1.84 billion). This reflects cumulative impairment losses of approximately ¥277 billion ($2.153 billion) since Bitcoin was first acquired and an average book value of approximately ¥1.79 million (approximately $13,887) per bitcoin. It is

At the same time, Bitcoin’s acquisition cost was about 514 billion yen ($3,993 million) and its market value was about 282 billion yen ($2,194 million), so the value has been declining since the time of purchase. .

It should be noted that standard accounting rules in the United States dictate that figures should be adjusted only when the book value of a virtual currency is impaired or depreciated. In other words, if the price increases, the increase will not be reported until you sell the token.

Maintain strategy to invest in Bitcoin

In 4Q22, MicroStrategy sold part of its Bitcoin assets for the first time. He sold about 704 BTC, and the profit on sale was about 11.6 million yen ($900,000).

However, this was partly sold as a tax measure, and the strategy of investing in Bitcoin is maintained. Between November 1st and December 21st, the company purchased approximately 2,395 BTC through its subsidiary, Macro Strategy, and sold 704 BTC on December 22nd.

Relation: US Micro Strategy sells part of Bitcoin for the first time due to tax measures

MicroStrategy Chief Financial Officer Andrew Kang explained:

In addition, MicroStrategy Chairman Michael Saylor said at a financial results briefing that although the Bitcoin price has been volatile since the company began buying Bitcoin in August 2020, the performance of MicroStrategy shares has been a major factor. Better than stock indices, he said.

For the entire 4Q, the company recorded total revenue of approximately ¥17.1 billion ($132.6 million). That’s better than analysts’ expectations of $131 million. MicroStrategy’s main business is providing a business data analysis platform for companies.

At the end of last year, the company also revealed that it was developing products related to Bitcoin (BTC) L2 technology “Lightning Network (LN)”.

Relation: MicroStrategy to provide enterprise solutions for Bitcoin Lightning

In 2022, MicroStrategy’s share price fell 35%, but in 2023, it fell from about ¥19,000 (about $145) at the beginning of the year to about ¥38,000 (about $292) on February 2. has doubled.

Tesla owns bitcoin

Tesla is also among the prominent companies that hold bitcoin as financial assets. Tesla is said to sell 75% of its holdings in 2022, with the rest worth 9,720 BTC (¥28.9 billion).

Relation: Tesla’s settlement of accounts reveals continued holding of Bitcoin, China’s first population decline in 60 years | 26th Financial Tankan