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MicroStrategy Loses $170.1M on Bitcoin Impairment Grounds – Report

MicroStrategy, a cryptocurrency financial services firm, announced its financial situation for the first quarter of 2022. The software firm announced it lost over $170 million via impairment charges on its virtual asset treasury during the report’s period.

Based on the organization’s most recent financial reports, its losses due to impairment during the report’s period were approximately 16% more than its impairment losses in Q4 2021. In the financial register, an impairment charge helps define how many resources an organization lost concerning the dip in the recoverable value of an asset over a specific time. 

With unstable assets like digital assets, such reductions occur whenever the prices fall. The financial reports would document and calculate the worth of digital assets if their prices fall. 

However, an impairment losses report would discard any increase in the value of the digital assets. Therefore, cryptocurrency financial services organizations don’t declare an increase in company size due to a spike in digital assets’ prices.

Further information on the company record with US regulatory bodies puts the aggregate impairment losses of the company at approximately $1.1 billion from its inception.

The company reportedly purchased the BTC present in its treasury at approximately $4 billion, depicting a median cost/BTC of about $31,000. The computed cost/BTC range sits under the operating market BTC worth about $38.9K and reasonably below the least of the coin’s price this year at approximately $33,000.

MicroStrategy Not Stealthily Trading Bitcoin 

The company began buying BTC while the global economy experienced a downturn from the pandemic in Q3 2020. The aim of the purchases was reportedly towards replacing the American fiat currency as a treasury hedge.

After about two years of such stocking operations, the financial intelligence organization’s Chief Executive Officer, Michael Saylor, has reportedly taken uncommon actions to secure liquidity for purchasing more BTC. Part of the CEO’s activities to obtain liquidity to boost the organization’s store includes convertible notes and launching stock products.

Michael Saylor has reportedly been a loud supporter of virtual assets and regularly utilizes his office to speak to people globally about his beliefs and activities. Moreover, the organization obtained an interest-only credit facility of $200+ million from Silvergate, a virtual assets’ financial services organization. Reports say an aspect of virtual assets in MicroStrategy’s collateral treasury supports Silvergate. 

The credit facility would assist the organization in buying more BTC. However, some persons have accused the CEO of MicroStrategy of stealthily saving some virtual assets. The accusations also say that Saylor’s claims that he would hoard the treasury for a century are untrue.

Some persons also assert that the treasury’s founder had traded more than reports claimed that Saylor had sold more than 8,000 bitcoins. The executive had reportedly denied the claims that he’s stealthily saving some digital assets.

Additionally, with the latest reports on the impairment losses of the company, the allegations are false. There are also no signals that the company intends to sell any virtual assets soon.

However, the company’s CEO has announced intentions to invest assets outside the collateral. However, there have been no activities in that direction yet.

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