Bitcoin attorney Michael Saylor is stepping down as CEO of the software company he co-founded, MicroStrategy, and will instead take on the role of executive chairman. Saylor’s belief in Bitcoin has made the company a holding vehicle for the cryptocurrency. The news came when the company reported earnings for the second quarter. It recorded a loss of $1.062 billion, mainly due to a $917 million write-down based on the value of its Bitcoin holdings, which have plunged since their price peaked last November.
Phong Le, MicroStrategy’s current president, will take Saylor’s place as CEO. “I look forward to leading the organization for the long-term health and growth of our enterprise software and bitcoin acquisition strategies,” Le said in a statement to shareholders.
In 2020, MicroStrategy acquired $250 million in Bitcoin, and as of June 30, 2022, MicroStrategy reports that it currently holds $1.988 billion in Bitcoin.
Digital Assets: As of June 30, 2022, the book value of MicroStrategy’s digital assets (consisting of approximately 129,699 bitcoins) was $1.988 billion, reflecting cumulative impairments of $1.989 billion since the acquisition and an average book value per bitcoin of approximately 15,326 dollars. As of June 30, 2022, the initial cost basis and market capitalization of MicroStrategy’s bitcoin were $3.977 billion and $2.451 billion, respectively, reflecting an average cost per bitcoin of approximately $30,664 and a market price per bitcoin of $18,895.02, respectively.
MicroStrategy’s note to investors says Saylor will continue to “provide oversight of the company’s bitcoin acquisition strategy as chair of the board’s investment committee.” It is unclear what led to the organizational shakeup, as Saylor has led MicroStrategy since he founded the company in 1989.
“I believe that splitting the roles of chairman and CEO will enable us to better pursue our two corporate strategies of acquiring and holding bitcoin and growing our analytics software business,” Saylor said. “As executive chairman, I will be able to focus more on our bitcoin acquisition strategy and related bitcoin advocacy initiatives, while Phong will be empowered as CEO to manage overall corporate operations.”
In April, Saylor announced that MicroStrategy would be the first company to adopt Fidelity’s Bitcoin-based 401(k) retirement plan for its employees.
The Securities and Exchange Commission opened an investigation into MicroStrategy, when it objected to the way the company accounted for Bitcoin in one of its 2021 filings. As noted by Bloomberg tax, Microstrategy used non-GAAP measures to record its Bitcoin holdings, which are not based on generally accepted accounting principles (GAAP). Companies typically use non-GAAP methods sparingly.
MicroStategy was also the subject of an SEC investigation into allegations of civil accounting fraud back in 2000. The SEC accused Saylor and his top executives of overstating the company’s revenue and earnings after it went public in June 1998 through March 2000. Saylor and two of his executives settled with the agency for $11 million, with neither “admitting or denying the commission’s allegations.”