MicroStrategy, the renowned business intelligence firm and one of the major corporate holders of Bitcoin in the United States, successfully returned to profitability in the second quarter, capitalizing on the surge in Bitcoin’s price, News About Nigeria reports.
According to their Q2 earnings results filed on Aug. 1, MicroStrategy reported an impressive $22.2 million in net income, a striking turnaround from the net loss of $1.1 billion experienced in the same period the previous year. Total revenues remained steady at $120.4 million.
The remarkable swing in profitability can be attributed in large part to a comparatively smaller digital asset impairment loss of $24.1 million during the quarter, which is significantly lower than the staggering $917.8 million loss recorded in Q2 2022.
Digital asset impairment occurs when the market price of Bitcoin falls below the acquisition price. In this case, the price of Bitcoin fluctuated between $25,000 and $30,700 during the second quarter, witnessing a noteworthy rally in mid-June following the filing of several new spot Bitcoin exchange-traded funds with the Securities and Exchange Commission.
MicroStrategy’s Chief Financial Officer, Andrew Kang, proudly announced that their bitcoin holdings increased to 152,800 bitcoins as of July 31, 2023. The company managed to achieve the largest increase in its Bitcoin holdings within a single quarter since Q2 2021, adding 12,333 bitcoins during Q2.
Kang revealed that MicroStrategy utilized cash from its operations to bolster its Bitcoin holdings, citing a “promising backdrop” of growing institutional interest, enhanced accounting transparency, and increasing regulatory clarity for Bitcoin.
In a Bloomberg interview on June 13, MicroStrategy chairman Michael Saylor expressed his belief that recent enforcement actions by the Securities and Exchange Commission would ultimately favor Bitcoin, which remains the only crypto excluded from being classified as a security, according to SEC Chair Gary Gensler.
Throughout the quarter, the company acquired 12,333 Bitcoin for $347 million, and as of July 30, it purchased an additional 467 BTC, bringing the total Bitcoin balance to an impressive $4.4 billion at current prices.
In a separate filing to the SEC, also submitted on Aug. 1, MicroStrategy disclosed its plan to sell up to $750 million in stocks for the purpose of acquiring more Bitcoin and for general corporate uses.
Bitcoin’s price continued its upward trajectory in 2023, experiencing a remarkable 79% surge since the beginning of the year. Presently, it is trading at $29,139, as per Binance data.
The outstanding performance of MicroStrategy was reflected in its share price, which started at $145.02 per share on Jan. 3 and has since risen by nearly 200% to $434.98 at the time of writing.
In July, analysts from New York-based investment firm Berenberg Capital projected a bullish outlook for MicroStrategy, expecting its shares to significantly appreciate in value during the upcoming Bitcoin halving rally.