Microstrategy bought Bitcoin in 2Q when Tesla sold; Saylor goes back

Analytics software company and corporate bitcoin hoarder Microstrategy bought 481 million bitcoins for $10 million in the depths of the so-called crypto winter, buying the currency in a quarter that saw automaker TeslaTSLA
sell off their holdings.

The company also said CEO Michael Saylor will step down after 30 years leading the business, although he will remain executive chairman. He will also continue to serve on the bitcoin mining council, a global forum for bitcoin miners aimed at promoting the bitcoin network.

In the absence of exchange-traded funds for bitcoin, Microstrategy shares have become a means of gaining exposure to cryptocurrency through traditional investment channels. Acquiring and holding bitcoin is one of two corporate strategies for the company, second only to its analytics software business. Microstrategy remains committed to acquiring bitcoin, Saylor said.

“We are still early in the adoption cycle for digital assets and BitcoinBTC
“In general, there’s clearly strong demand around the world, for a number of things,” Saylor said on a conference call to discuss Q2 results, which included a $918 million write-down on earnings, mostly related to lower cryptocurrency values. “First of all, A) a digital asset to serve as a long-term store of value, B) a digital commodity to serve as a trading alternative to energy, metals and other physical commodities, C) a digital payment network that is open, neutral, fast and free for anyone to use.”

Microstrategy has invested heavily in bitcoin since August 2020, and Elon Musk’s Tesla followed suit in January 2021 when the company bought for $1.5 billion. But Tesla sold 75% of its bitcoin in Q2, adding $936 million in cash to its balance sheet. The fall in value for Tesla as a result of bitcoin’s recent fall is unclear. The company still owns $218 million in digital assets.

Saylor’s conviction about bitcoin’s long-term value has not protected the company’s bottom line. The company posted a loss of $1.06 billion in the second quarter, compared with a loss of $299 million a year earlier. Microstrategy generated $122 million in revenue, $96 million in profit, from its software business through products, subscriptions and other services.

Bitcoin has faced a harsh rebound from its pandemic-era highs, the native crypto is down 66% from its peak price of $68,721 in November 2021. Microstrategy is not isolated from this decline, the value of the company’s digital assets has fallen to $2 billion from 2.9 billion dollars, which led to the decline in value.

Micro-strategy can also be a means of shorting bitcoin as well as gaining exposure: 51% of the company’s available shares are currently sold short. MicrosoftMSFT
ended Tuesday trading at $278.26, down 50% for the year.