MicroStrategy Makes Profit, Reports $24 Million Bitcoin Impairment Charge in Q2

Business intelligence company MicroStrategy—one of the largest institutional holders of Bitcoin in the U.S.—reported a $24.1 million impairment charge on its crypto holdings today but nonetheless returned to profitability this quarter.

MicroStrategy said in its Q2 2023 earnings report that it bought even more Bitcoin in July. The largest publicly traded company with Bitcoin on its balance sheet now says it holds 152,800 coins—worth about $4.4 billion. 

An impairment charge refers to a loss of value in assets—in this case, the digital assets held by the company. The price of Bitcoin is currently down compared to the average price the software company initially paid per coin, resulting in the loss. 

The net income of the company was $22.2 million for the second quarter of the year, however, compared to a loss of nearly $1.1 billion during the same period in 2022.

In the same quarter last year, Q2 2022, MicroStrategy had posted an impairment charge on its Bitcoin holdings of nearly $1 billion.

In the company's latest earning statement, MicroStrategy Chief Financial Officer Andrew Kang said the firm continued buying the asset "against the promising backdrop of increasing institutional interest, progress on accounting transparency, and ongoing regulatory clarity for Bitcoin."

Its founder and chairman Michael Saylor started buying the cryptocurrency in August 2020. He claims that the asset is a good hedge against inflation and will get the best returns for shareholders.

So far, he appears to be right: despite the impairment charge, MicroStrategy stock—MSTR on the Nasdaq—is up 197% since the first Bitcoin buy.

The price of the biggest cryptocurrency by market cap has risen 156% since then, too, from $11,398 per coin to $29,238 today.

Saylor has said that the company's strategy "is to buy and hold Bitcoin, and the key for us is to be consistent, transparent and responsible in the pursuit of that strategy."