MicroStrategy (MSTR), the largest corporate holder of Bitcoin (BTC), sent shockwaves through the market after reporting a colossal net loss of $12.4 billion for the fourth quarter, driven almost entirely by the ongoing crypto winter. The results, released late Tuesday, immediately sent MSTR shares tumbling to an 18-month low.
The massive quarterly deficit was primarily attributed to a non-cash digital asset impairment charge. Under current accounting rules, companies holding volatile assets like Bitcoin must record an impairment when the asset’s value falls below its cost basis, even if the asset has not been sold. The steep decline in BTC prices during Q4 meant the company had to recognize unprecedented impairment write-downs.
As of the end of the quarter, MicroStrategy maintained its aggressive accumulation strategy, holding approximately 132,500 BTC on its balance sheet. However, the average purchase price for these holdings remains substantially higher than current market rates, exposing the company’s valuation to extreme market volatility.
Following the earnings announcement, MSTR stock fell nearly 15% in after-hours trading, settling at its lowest valuation since mid-2021. Executive Chairman Michael Saylor quickly moved to reassure investors, reiterating the company’s long-term commitment to its ‘Bitcoin acquisition strategy.’ Saylor emphasized that the impairments are non-operational and do not reflect the intrinsic value or cash flow of the underlying assets. Nonetheless, market analysts note that MSTR’s equity performance remains inextricably linked to the unpredictable movements of the cryptocurrency market, placing intense scrutiny on its corporate treasury decisions.
Source: Bitcoin Giant Strategy Records $12.4 Billion Q4 Loss as MSTR Shares Hit 18-Month Low
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