MicroStrategy posts profit on benefit tied to Bitcoin stash

MICROSTRATEGY, the enterprise-software maker better known as the largest public holder of Bitcoin, posted its first profit in nine quarters after registering a tax benefit related to its horde of the cryptocurrency.

The Tysons Corner, Virginia-based company controlled by Bitcoin advocate Michael Saylor had net income of US$461 million, or US$31.79 a share, in the first quarter, compared with a loss a year earlier. During the recent quarter, the 72 per cent rise in the price of Bitcoin allowed MicroStrategy to basically reduce a reserve related to earlier large impairment charges for the cryptocurrency, resulting in a one-time tax benefit of US$453.2 million.

Revenue from the software business rose 2.2 per cent to US$121 million, beating the US$119 million estimate that analysts surveyed by Bloomberg expected. The company took an impairment charge on digital assets of US$18.9 million for the three months ended in Mar 31.

Saylor began buying Bitcoin in 2020, to reduce the company’s holdings of cash before of the eroding threat of inflation. By the end of March, MicroStrategy held a total cache of 140,000 Bitcoin, according to its financials. The company spent around US$179 million to add 7,500 Bitcoin in the quarter.

“Ultimately it’s not easy to see what better strategy there might be,” Saylor said during the company’s earnings call on Monday (May 1). “We found by simply acquiring and holding Bitcoin we can outperform our peers in the enterprise software business. The regulatory environment for Bitcoin is improving. As capital flows out of the crypto industry, it flows into Bitcoin.”

As Bitcoin rallied, MicroStrategy has seen its shares surge as well. They are up 118 per cent so far this year. Bitcoin has risen by about 70 per cent so far this year. Last year, Saylor relinquished his chief executive role at the company to focus on advancing his strategy for holding Bitcoin on MicroStrategy’s balance sheet. BLOOMBERG

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