Market Analysis

MicroStrategy Posts Modest $727K Bitcoin Impairment Charge

microstrategy-posts-modest-$727k-bitcoin-impairment-charge

The company’s losses were slight in Q3 thanks to Bitcoin’s stable value.

Key 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 considerably higher in other periods and quarters.
  • MicroStrategy holds 130,000 BTC worth $2.5 billion and is the largest public company to invest in Bitcoin.

MicroStrategy reported a $727,000 impairment charge this quarter following losses on its Bitcoin holdings.

MicroStrategy Faces Minimal Losses

MicroStrategy saw only slight Bitcoin losses this quarter.

According to a Tuesday press release, the company incurred only a “minimal bitcoin impairment charge” 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 on September 30, 2022. By comparison, the company saw $65 million of impairment losses in the same three-month period in 2021.

MicroStrategy also reported $1 billion of impairment losses in the nine-month period ending September 30, 2022, and $684 million of impairment losses in the same nine-month period ending September 30, 2021.

Impairment is a particular term used to describe the deprecation 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 policies on accounting matters. In October, the FASB announced that it would require corporations to measure crypto assets at fair value—a change that will set clear accounting rules for institutional crypto investors.

MicroStrategy CFO Andrew Kang wrote that the company believes this will “improve upon the current, unfavorable intangible accounting treatment” and “promote additional institutional adoption of bitcoin as an asset class”

The company added that it is the largest publicly traded corporate owner of Bitcoin, as it holds 130,000 BTC.

MicroStrategy originally purchased that amount for $3.98 billion in various purchases starting in August 2020. Its holdings are now worth $2.53 billion at current prices.

Of its 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.

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