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  • Writer's pictureConnie Chan

MicroStrategy Retains Long-Term Time Horizon On Bitcoin In Q3 Report

The world’s largest publicly traded company by Bitcoin holdings, MicroStrategy, has released its Q3 2022 report. The company, owned by perma bull Michael Saylor, announced that it still hasn’t sold a single Bitcoin.

Saylor’s company bought the dip again in September when it bought 301 BTC worth $6 million, at an average acquisition price of ~$19,860 per Bitcoin.

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As of September 30, 2022, MicroStrategy’s holdings now total 130,000 Bitcoins. This amount represents 0.62% of all coins ever mined. The total cost of all purchases, net of fees and expenses, is $3.983 billion, which equates to an average purchase price of $30,639 per coin.

However, the current book value is only $1.993 billion, reflecting an accumulated impairment of $1.990 billion and an average book value per Bitcoin of approximately $15,331.

In addition, MicroStrategy reported a minimal impairment of its Bitcoin (BTC) holdings of $727,000 in the third quarter, in line with the relative small decline in the spot price. Compared to previous quarters, when the BTC price fell massively, the losses were rather small. In Q2, MSTR reported a loss $917.8 million.

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Andrew Kang, Chief Financial Officer (CFO) of MicroStrategy, emphasized in a press release that the company will continue to buy BTC and hold it for the long term. Furthermore, the CFO emphasized that the recent directive from the Financial Accounting Standards Board made the company opt for fair value accounting.

This will allow the company to immediately report losses and gains as with other traditional financial assets. Kang explained that this will also encourage other public companies to tap into Bitcoin as an asset class.

We incurred a minimal bitcoin impairment charge as bitcoin prices were stable during the third quarter, and were encouraged by FASB’s recent announcement of its support for fair value accounting for Bitcoin. If finally adopted and implemented, we believe fair value accounting will improve upon the current, unfavorable intangible accounting treatment applicable to bitcoin holdings and will promote additional institutional adoption of bitcoin as an asset class.

To caution investors, MicroStrategy also emphasized in its press release that its core business is insulated from short-term Bitcoin price volatility. In addition, the company has “sufficient liquidity to cover debt service payments,” with no short-term debt maturities.

Numbers In Favor Of MicroStrategy’s Bitcoin Standard

Michael Saylor, who stepped down from his position as CEO on August 8 but remains with the company as executive chairman, has not tired lately of emphasizing that his Bitcoin bet outperforms all other investments by a wide margin.

On October 28, he shared the chart below on the performance of all key assets and indices since MicroStrategy adapted the Bitcoin standard on August 10, 2020.

At the time of writing, the Bitcoin price is moving sideways, waiting for Federal Reserve Chairman Jerome Powell’s highly anticipated speech at today’s FOMC meeting. As NewsBTC reported, the market has priced in a 75 basis point hike and is mainly focusing on the comments for the future rate hikes.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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