MicroStrategy, a Fortune 500 company with 125,051 Bitcoin (BTC) in assets, announced its financial results for the fourth quarter of 2021 on Tuesday.
The enterprise software solutions provider posted a net loss of $146.6 million due to the depreciation of the bitcoin wallet. The high impairment losses contributed to the company’s operating expenses, which increased by 125% to reach $248 million compared to the same quarter last year.
An impairment loss is the written reduction in the cost of acquisition of an asset that results in a decrease in its fair value. When the fair value of the asset falls below the purchase price, the difference is amortized.
Over the past six quarters, the company has lost $901 million in impairment losses on its bitcoin holdings.
MicroStrategy decided to add claims for bitcoin depreciation after the US Securities and Exchange Commission rejected current “non-GAAP” bitcoin accounting practices. The Securities and Exchange Commission asked the business intelligence firm to add equity-based compensation costs, as well as impairment losses and gains on sales.
The $146.6 million impairment loss was the company’s third largest, accounting for 25% of bitcoin purchases in the same quarter. The largest impairment loss occurred in the second quarter of 2021, when nearly 80% of the total value of bitcoin purchased in that quarter was lost. MicroStrategy reported a net loss of $90 million, or $8.43 per share, on a diluted basis, in the fourth quarter.
Related: MicroStrategy Buys 660 Bitcoin for $25 Million
MicroStrategy currently owns a total of 125,051 BTC, purchased around $3.78 billion at an average price of $30,200 per bitcoin.
MicroStrategy began buying bitcoin in August 2020 to use as a treasury hedge in place of the US dollar. The company has been instrumental in providing bitcoin to institutional and public companies, including companies such as Tesla and SpaceX.
