MicroStrategy continues to add bitcoin to their stash, as in July, the cloud software company purchased another 169 bitcoins worth $11.4 million. With this, MicroStrategy now holds a total of 226,500 bitcoins with an average price of $36,821.
The world’s largest corporate Bitcoin holder, also announced a net loss of $102.6 million due to digital asset impairment losses for the second quarter ending June 30.
This means that the fair value of MicroStrategy’s Bitcoin holdings, as determined by market prices, is lower than the company’s original purchase price. It’s important to note that impairment losses are non-cash accounting charges and do not directly impact MicroStrategy’s cash flow.
Despite facing challenges in the broader market, MicroStrategy reported a 21% year-over-year increase in subscription service revenue. The company acquired an additional 12,222 bitcoins during the quarter, bringing its total holdings to 226,500 coins, valued at $8.3 billion based on the original cost.
To measure the performance of its Bitcoin strategy, MicroStrategy has introduced a new key performance indicator (KPI) called ‘BTC Yield.’ This KPI targets a 4-8% annual increase in the ratio between the company’s Bitcoin holdings and its assumed diluted shares outstanding. In simpler terms, it aims to show how much shareholder value is created for each unit of Bitcoin acquired.
On a brighter note, the 10-for-1 stock split for a $2 billion at-the-market equity offering program is scheduled for 8th August.
MicroStrategy’s CEO, Phong Le, remains optimistic about the future, stating the company’s ‘laser focus’ on Bitcoin development and its commitment to achieving positive BTC Yield. CFO Andrew Kang highlighted the company’s efforts in ‘closely managing’ its equity capital. However, investors remain cautious, as the impact of Bitcoin’s price fluctuations on the company’s overall financial health is a major concern.
While MicroStrategy’s Bitcoin strategy is bold and ambitious, the significant impairment losses raise questions about the long-term sustainability of this approach. The company’s ability to navigate the volatile cryptocurrency market and deliver positive returns to shareholders will be closely watched in the coming quarters.
