MicroStrategy Unfazed by the Market Crash, will Continue to Buy Bitcoin (BTC)

Written by on January 27, 2022

Despite recent dips in the value of bitcoin, MicroStrategy Inc. intends to continue investing in virtual assets. According to the WSJ, Phong Le, the CFO of the business intelligence firm, has stated that the company aims to “purchase and hold.”

Along with manufacturer Tesla Inc. and payment company Block Inc., the Tysons Corner, Va.-based software company is one of many companies with bitcoin holdings.

MicroStrategy is Holding Bitcoin

As of September 30, the corporation possessed $2.41 billion in cryptocurrency. The value is up from $1.05 billion at the end of 2020. MicroStrategy also stated that it purchased bitcoins for $2.04 billion in cash during the first nine months of 2021. The value is up from $425 million the previous year. Meanwhile, on February 1, the corporation will report its fourth-quarter profits.

After hitting a seven-month low in the morning, bitcoin sank below $36,800 late Monday, down nearly half from its record high of $68,990.90 in November. Market volatility is one of the primary reasons many CFOs avoid investing corporate funds in crypto assets. They have also been alarmed by the lack of clearly established accounting rules.

Mr. Le stated that MicroStrategy would continue to buy bitcoin this year. However, it is uncertain whether it will buy more than last year; the company has no intentions to sell the commodity. MicroStrategy is also considering purchasing bitcoin-backed bonds if the market gets more liquid. He believes that this will happen within the next year or two. “We’re always looking for new methods to provide value to our shareholders in terms of bitcoin,” he stated.

MicroStrategy’s stock has dropped 19% since Thursday, closing at $370.45 on Monday. Mr. Le attributed the decline primarily to a selloff in technology and bitcoin-related stocks.

SEC Measures Regarding Bitcoin

The SEC notified MicroStrategy in letters made public last week. SEC asked the company to adjust how it reports its bitcoin holdings in future filings. The SEC’s corporate-finance division frequently sends comment letters to publicly traded corporations. They are inquiring about their disclosures or accounting processes.

MicroStrategy has been filtering out bitcoin volatility when employing measurements not specified by the U.S.

 “We object to your adjustment for bitcoin impairment charges in your non-GAAP measures,” the regulator wrote in a December 3 letter.

Mr. Le stated in an October letter to the SEC that including such impairment losses. As later requested by the SEC, it could distract investors from analyzing its operating results. On the other hand, MicroStrategy informed the SEC on December 16 that it would amend its disclosures accordingly. Meanwhile, the SEC seeks to clarify the roughly $2 trillion crypto industry laws.

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