“Saylor’s MicroStrategy faces a bumpy ride as it writes down Bitcoin holdings, underscoring the volatility of the cryptocurrency market.”
MicroStrategy Inc., the enterprise-software maker and the largest publicly-traded holder of Bitcoin, has reported a third-quarter loss due to a decline in the value of the cryptocurrency. The company’s net loss widened to $143.4 million, while revenue from the software business rose about 3% to $129.5 million.
MicroStrategy has been buying Bitcoin as a hedge against inflation since 2020 and has faced significant writedowns following downturns in the volatile digital currency. The company’s co-founder, Michael Saylor, has accumulated over $5.5 billion worth of Bitcoin, turning MicroStrategy into a Bitcoin proxy for equity investors.
Despite the losses, MicroStrategy plans to purchase more Bitcoin, according to Chief Financial Officer Andrew Kang. However, investors and analysts are starting to question whether the company’s shares will continue to command a Bitcoin-related premium, especially with the potential approval of Bitcoin ETFs by the US Securities and Exchange Commission.
MicroStrategy shares have more than tripled since 2020 as the value of Bitcoin surged. Saylor highlighted the advantages of investing in MicroStrategy stock instead of a US spot Bitcoin ETF, emphasizing the absence of fees for Bitcoin exposure.
Since the end of the quarter, MicroStrategy’s Bitcoin holdings have increased in value by approximately $1.2 billion. Saylor also mentioned his plans to sell some of his MicroStrategy shares between January and April of next year.
Overall, MicroStrategy’s financial performance is closely tied to the volatility of Bitcoin. While the company has experienced losses due to the decline in cryptocurrency value, it remains committed to its Bitcoin-focused strategy and aims to capitalize on the growing interest in the digital asset.