In a statement, MicroStrategy said Saylor will focus primarily on “innovation and long-term corporate strategy, while continuing to oversee the company’s bitcoin acquisition strategy.”
“As CEO, I will be able to focus more on our bitcoin acquisition strategy and related bitcoin promotion initiatives, while Phong will have the power to manage overall corporate operations as chief executive officer,” Saylor said in a statement.
At the end of the second quarter, the book value of MicroStrategy’s digital assets (composed of approximately 129,699 bitcoins) was $1.988 billion, reflecting cumulative impairment losses of $1.989 billion since the acquisition and a average accounting per bitcoin of about $15,326, the company said in a statement.
MicroStrategy’s original cost base and market value of bitcoin were $3.977 billion and $2.451 billion, respectively, reflecting an average cost per bitcoin of approximately $30,664 and a market price per bitcoin of u$s18,895.02, respectively.
While it doesn’t reflect the current value of the company’s bitcoin investment, the deterioration offers the latest evidence of just how tough the crypto market has been for the largest known corporate holder of bitcoin.
As of Tuesday afternoon, the bitcoin price has rebounded 23% from its low of $17,708 per coin on June 17, though it remains 51% down year-to-date.
Since first buying bitcoin during the third quarter of 2020, MicroStrategy has invested more than $4 billion in the cryptocurrency. To do that, it issued corporate debtconvertible bonds, issued shares, and borrowed some of his bitcoin.
MicroStrategy shares were barely changed in after-hours trading after this announcement. Through Tuesday’s close, the stock has gained more than 60 % for the last month, but it’s still down about 50 % so far this year.
Charges related to the company’s bitcoin position also don’t tell the company’s full story according to BTIG analyst Mark Palmer, who calls it “accounting noise.”
Based on Generally Accepted Accounting Principles (GAAP), MicroStrategy is required to account for your bitcoin purchases by recording their initial cost with a reduction if the value of bitcoin declines.
Under these rules, the value of bitcoin from the quarter’s low to the end cannot be reported unless the asset is sold, so the impairment charge reflects the lowest value of bitcoin during the previous quarter, not its value. market at the end of the second quarter.
“The reality is that the overwhelming driver, the value of MicroStrategy, is the company’s Bitcoin holdings. The driver of that, of course, is the price of Bitcoin at any given time,” Palmer added.
Since the value of bitcoin began to plummet in May, investors have sold shares of MSTR at an increasing rate. Between May and July 14, the number of shorted MSTR shares increased by 1.19 million from 2.4 to 3.6 million shares, reaching a par value of more than $1 billion in short positions according to data from Yahoo Finance.
“ Our people and our brand have incredible momentum. I would like to reinforce our commitment to our customers, shareholders, partners, and employees, and look forward to leading the organization for the long-term health and growth of our enterprise software and bitcoin acquisition. strategies,” Le said in the statement.
At current market prices, the company’s cryptocurrency investments have a total market value of $2.9 billion.
Source: Ambito
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