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MicroStrategy’s Bitcoin Holdings Take a Record $3.4 Billion Hit

MicroStrategy Inc. When it started to buy a lot of bitcoin in the summer of 2020, CEO Michael Sellar said that inflation would make cash meaningless.

MicroStrategy Inc. When it started to buy a lot of bitcoin in the summer of 2020, CEO Michael Sellar said that inflation would make cash meaningless. The value of the crypto piles he has accumulated since then was তুল 3.4 billion compared to the end of the last quarter.

Technically, the collapse is another paper loss for the enterprise software maker under U.S. accounting rules until Bitcoin is sold, but it has consequences. Microstrategy will probably have to take charge of a significant loss when reporting second quarter results. And for shareholders, the stock fell 66% in the quarter ended Thursday, surpassing the 59% fall in Bitcoin.

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Saylor has eased any concerns, sticking to the strategy and adding to its reserves over the last quarter as Bitcoin has seen its biggest price drop in more than a decade. MicroStrategy noted at the end of June that it would report results as normal after the next quarter, although Wall Street regulators typically have to pay large losses to companies much earlier.

At the end of the first quarter, MicroStrategy’s bitcoin stash was worth about $ 5.9 billion, which means that as of June 30, Bitcoin had finished at about $ 18,900, the same pile – including some small purchases announced at the end of June – was worth about $ 2.45 billion, or just three months earlier. 58% less.

“To redefine our strategy, we want to acquire and retain bitcoin and in the long run,” Phong Le, president and CFO of MicroStrategy, said in a conference call on May 3. “We view our bitcoin holdings as long-term holdings and we do not currently plan to engage in bitcoin sales.”

Shirish Jajodia, senior director of treasury and investor relations at MicroStrategy, said in response to a request for comment that the company had no plans to sell bitcoin and that shareholders supported its strategy. Jajodia added, “Microstrategy is resistant to near-term swing due to strong capital structure.

According to a filing with the U.S. Securities and Exchange Commission on Wednesday, at the height of the crypto market’s collapse, MicroStrategy bought another 480 bitcoins worth about $ 10 million between May 3 and June 28, each for about, 20,817.

The Tyson Corner, Virginia-based business has about 129,699 bitcoins bought at an average price of about $ 30,665 each, with a total purchase price of about $ 3.98 billion, according to a Form 8 filed Wednesday.

Although a few crypto-centric companies have added Bitcoin to their balance sheets, the impact that digital assets and other currencies are having on the current beer market may make a potential entrant think twice before diving in.

Nevertheless, some advocates of digital assets seem to be concerned about the recent price declines in the long run, as well as the seller’s strategy.

“If you look at our price target in microstrategy, it’s based on the value of bitcoin reaching $ 95,000 by the end of 2024,” said Mark Palmer, head of digital asset research at BTIG, which has a buy rating in microstrategy, with a target price of $ 950. “To be very honest, a terrible thing could happen between now and 2024.”

Shares of Microstrategy ended the second quarter at 164.30. The stock rose to উচ্চ 1,272.94 in February 2021. It traded at শেষে 123.92 at the end of July 2020, just before Saylor started buying Bitcoin.

“There will only be 21 million bitcoins that are ever mined, because there is a definite supply of bitcoins,” Palmer said. “This means that the price of Bitcoin will be driven by demand as opposed to supply-demand balance.”

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