Michael Sailor, CEO of enterprise data analytics firm MicroStrategy, announced Monday in a Twitter post and the company’s statement that the company has purchased another 7,002 Bitcoins (BTC), valued at approximately $414.4 million at an average price of $59,187 per coin. MicroStrategy sold 571,001 shares of the company between October 1 and November 29 at $732.16 per share, raising $414.4 million in cash.
As of Monday, the company owns 121,044 BTC, valued at $3.57 billion. It was bought at an average price of $29,534 per coin and included a capital gain over the previous coins.
In August 2020, MicroStrategy announced that it would accept Bitcoin as its reserve asset in the treasury, citing the digital currency as a “safe store of value” and attractive investment with a higher long-term return potential than holding cash. In addition, the company drew attention to the unique incentives issued by governments to combat COVID-19 as a catalyst for the potential inflation and subsequent weakening of fiat currencies. Since then, MicroStrategy has been buying bitcoins almost continuously every three months.
Regular investors usually incur losses when the price of bitcoin goes down and profit when the price goes up. However, this is not always the case with MicroStrategy. MicroStrategy’s president and chief financial officer, Fong Lu, said the company’s bitcoin holdings are classified as “intangible assets that are not identified under current accounting rules,” according to a profit and loss statement released last month. This means that at any time after the acquisition, if the fair value or market value of bitcoin is below book value, the company will have to recognize impairment. These impairment losses can then be used to legally offset the companies’ tax obligations.