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MicroStrategy Invested Millions of Dollars in Bitcoin

MicroStrategy is ready to spend millions of dollars on the world’s largest cryptocurrency. It once again purchased more Bitcoin, with the company adding 3,907 BTC to its holdings. The company upped its Bitcoin holding by 3,907 BTC between July 1 and August 23, according to Form K-8 published by the U.S. Securities and Exchange Commission (SEC) on Tuesday. The Form K-8 published by SEC also included other interesting details. The company from Virginia spent an average of $45,292 to acquire the additional Bitcoin.

With its latest purchase, MicroStrategy now holds 108,992 BTC, which cost it about $2.918 billion to acquire at an average price of approximately $26,769 per “coin”. With the price of the world’s largest cryptocurrency trading above $48,000, its Bitcoin holdings are worth more than $5 billion. The company started investing in the most famous cryptocurrency in 2020 and has consistently added to its BTC position. Its CEO Michael Saylor has also become a BTC proponent even encouraging other companies to consider adding BTC to their balance sheets.

MicroStrategy promised to buy more Bitcoin despite reporting impairment losses of $424.8 million in the second quarter. We are talking about a paper loss, based on its price at the end of the quarter. A paper loss does take into account a realized loss.

So, depending on how you add the figures up, the company appears to have made nearly $1 billion more from Bitcoin than it spent. At the end of the second quarter, the company held an approximate 105,085 BTC with a carrying value of $2.051 billion.

In fact, more than 50% crypto market decline did cause some impairment losses for U.S firms with Bitcoin holdings. Elon Musk’s Tesla also reported a $23 million impairment loss on its Bitcoin holdings as part of its Q2 financial results. It holds its BTC as an “intangible asset”. MicroStrategy also regards its BTC holdings as an “intangible asset”. So, both companies must report an impairment loss when the asset’s price declines below its cost basis.

In the second quarter of the year, Tesla did not buy or sell any digital assets according to the company’s earnings report. Elon Musk made it clear that Tesla does not plan to sell its holdings in the near future. He plans to keep his personal BTC holdings as well.

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