Disclaimer: Information found on CryptoreNews is those of writers quoted. It does not represent the opinions of CryptoreNews on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoreNews covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.
MicroStrategy, a leading Enterprise Business Intelligence (BI) platform that offers software, cloud computing, and various services to a diverse range of clients, is also recognized as one of the largest holders of Bitcoin globally, with around 140,000 Bitcoin in its reserves.
Out-competing by HODLing
The choice to acquire Bitcoin in significant quantities was made by then-CEO Michael Saylor in 2020, driven by concerns regarding inflation. He stated that merely HODLing BTC has provided his company with a competitive advantage over others in the BI sector.
“Ultimately, it’s not easy to see what better strategy there might be. 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.”
This assertion appears to conflict with recent events in the crypto sector, as representatives from major firms like Coinbase, Kraken, and private investors have criticized the U.S. government and its agencies for attempting to impose regulations through penalties rather than engaging in dialogue with the companies they aim to regulate.
In The Green After More Than 2 Years
Related Posts
In spite of the ongoing uncertainty surrounding cryptocurrency regulations in the U.S. and other regions, Bitcoin has recently experienced a resurgence, increasing by over 70% in the last quarter.
As reported by Bloomberg, this has enabled MicroStrategy to achieve profitability this quarter. The company’s quarterly report revealed a net income of $461 million in Q1, with shares trading at $31.79 at the time of this writing. Revenues also rose by 2.2% over the previous quarter, totaling $121 million.
ADVERTISEMENT
This progress is partly attributed to tax advantages stemming from MicroStrategy’s Bitcoin holdings. The company utilized an impairment charge—a method employed by investors to write off depreciating assets—related to its Bitcoin assets, resulting in a tax reduction of $18.9 million over the last quarter.
MicroStrategy further strengthened its balance sheets by leveraging Bitcoin’s price increase to repay a loan from Silvergate at a 22% discount.
“We strengthened our capital structure by reducing leverage by fully repaying our bitcoin-backed loan. We also continued to strategically manage our balance sheet through the addition of 7,500 bitcoin in the quarter.”
Thanks in large part to Saylor’s faith in Bitcoin, his company is now reporting profits in a financial climate where many of his competitors are struggling, as inflation and a potential recession dampen investor expectations.
SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.
