MicroStrategy reports a $146.6M impairment on Bitcoin holdings in Q4 2021

MicroStrategy, a business analytics firm that has invested heavily in Bitcoin, has released its financial results for Q4 2021. The company reported a net loss of $146.6 million from impairment charges on its Bitcoin holdings.

MicroStrategy is one of the largest Bitcoin whale addresses. The company’s BTC holdings currently stand at 125,051 Bitcoin.

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MicroStrategy reports a $146.6M impairment loss

An impairment loss happens the acquisition cost of an asset undergoes a reduction because of a dip in the fair value of that asset. When the asset’s fair value drops below the amount at which it was purchased, the difference is unaccounted for.

Following the $146.6M impairment loss suffered by MicroStrategy, the company’s operating expenses have increased significantly. The current impairment loss is a 125% increase from the amount reported in Q4 2020. The impairment charges on MicroStrategy’s BTC holdings during the last six quarters stand at $901 million.

MicroStrategy has calculated this impairment loss in its latest financial report due to the US Securities and Exchange Commission (SEC) recommendation. The SEC recently rejected the non-GAAP accounting methods used by MicroStrategy to report its BTC holdings.

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The SEC noted that MicroStrategy should chance its accounting methods in future financial reports by including a share-based compensation expense and calculating the impairment losses and gains on any asset sales made.

MicroStrategy suffered its highest impairment loss during the second quarter of 2021. At the time, the company lost nearly 80% in value from the BTC purchased during the period. During the fourth quarter of 2021, the analytics company also recorded a net loss of $8.43 per share on a diluted basis.

MicroStrategy buys more Bitcoin

The company has been aggressively increasing its Bitcoin holdings since August 2020. The company buys Bitcoin as a treasury hedge. The company’s CEO, Michael Saylor, is a strong Bitcoin supporter, and he has been instrumental in advocating for the adoption of Bitcoin by institutions.

During the recent dip, MicroStrategy bought an additional 660 Bitcoin valued at around $25 million. This recent purchase brought MicroStrategy’s entire Bitcoin portfolio to 125,051 BTC.

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