MicroStrategy 1Q Earnings Announcement, “Confidence in Bitcoin Strategy”

1 year ago 93

Significant decrease in Bitcoin impairment loss

On the 1st, the US business intelligence company “Micro Strategy” reported the results for the first quarter of 2023 (January to March). He also announced the holding status of the crypto asset (virtual currency) Bitcoin (BTC).

The company explained that it has made additional purchases of bitcoin and reduced impairment losses related to bitcoin. MicroStrategy CEO Fung Le said the company remains confident in its Bitcoin strategy as the cryptocurrency ecosystem continues to mature.

In the first quarter, we were able to reduce leverage and strengthen our capital structure by fully repaying our Bitcoin-backed loans.

It also purchased an additional 7,500 BTC, holding a total of 140,000 BTC, and continues to strategically manage its balance sheet.

MicroStrategy purchases and owns Bitcoin directly and indirectly through its wholly owned subsidiary MacroStrategy. In Q1 2023, about ¥24.6 billion ($179.3 million) of the net proceeds from the sale of Class A common stock were used to buy bitcoin.

Co-founder Michael Thaler says the company’s stock is up 166% since it first bought bitcoin in October 2020, outperforming the likes of Meta and Amazon. I am appealing.

Since @MicroStrategy adopted a #Bitcoin Strategy: pic.twitter.com/rrYTbvOkUS

— Michael Saylor (@saylor) May 1, 2023

MicroStrategy also benefited this quarter from the rising bitcoin price. Impairment loss related to Bitcoin has shrunk significantly from about 27.1 billion yen ($197.6 million) in the fourth quarter of 2022 to about 2.6 billion yen ($18.9 million) this term.

As of March 31, 2023, MicroStrategy holds approximately 140,000 bitcoins with a book value of approximately ¥275 billion ($2 billion). This reflects an accumulated impairment loss of approximately ¥298 billion ($2.172 billion) and an average book value of approximately ¥1.96 million (approximately $14,289) per bitcoin.

The acquisition cost of bitcoin is about ¥573 billion ($4.172 billion), while its market value is about ¥548 billion ($3.986 billion). The average acquisition cost per bitcoin is about 4.1 million yen (about $29,803).

Note that standard U.S. accounting rules dictate that book figures be adjusted only when the value of a cryptocurrency is impaired or depreciated. In other words, if the price increases, the increase will not be reported until you sell the token.

Launched Lightning Network products

For the entire 1Q, the company recorded total revenue of approximately 16.8 billion yen ($121.9 million). Increased by 2.2% compared to 2022 1Q.

MicroStrategy provides a business data analysis platform for companies, but it is also starting to develop Bitcoin-related products. It is a product related to Bitcoin’s L2 technology “Lightning Network (LN)”.

connection: MicroStrategy to provide enterprise solutions for Bitcoin Lightning

In April, the company’s e-mail address was changed to “Lightning Address”. It also made it possible to send bitcoins via corporate email.

connection: Micro Strategy, it is possible to send Bitcoin by corporate mail

What is the Lightning Network?

It is a Layer 2 off-chain technology developed to improve the transaction processing capacity of Bitcoin. It is expected that new products and services will be created because it will lead to faster transactions, reduced fees, and the possibility of small-value payments. A fast, low-cost payment network that aims to solve Bitcoin’s scalability problem.

Cryptocurrency Glossary