(Bloomberg) — MicroStrategy Inc. Chief Executive Michael Saylor’s norm-breaking decision to add Bitcoin to the balance sheet of the software maker is on the verge of turning sour.
When the price of Bitcoin briefly dropped under $30,700 on Monday, the value of the Tysons Corner, Virginia-based company’s Bitcoin holdings dropped below their average purchase price. MicroStrategy and subsidiaries held 129,218 Bitcoins as of April 4, a company filing shows. The largest cryptocurrency by market value has dropped more than 50% from its record high set in November. The crypto holdings are valued at around $4 billion.
Saylor has been the highest profile corporate advocate of buying Bitcoin. The company started acquiring Bitcoin for its balance sheet in August 2020, with Saylor citing the Federal Reserve’s relaxing of its inflation policy for helping to convince him to get out of cash. MicroStrategy has also issued bonds to boost its Bitcoin holdings on the balance sheet. It recently entered into a loan that is backed by Bitcoin.
Saylor has pledged to continue to buy Bitcoin and even joked about it in a Twitter posting Monday that referenced earlier criticism that implied he should be working for McDonald’s, which has been a software customer of the enterprise software maker.
While MicroStrategy touted its gains from the crypto assets, it has written down the value of its Bitcoin holdings when the market price has dipped below the purchase price. The company took a $170 million impairment charge for the last quarter and over $1 billion in writedowns related to its crypto holding. The company took a $170 million impairment charge for the last quarter.
MicroStrategy shares had soared since Saylor started buying Bitcoin, gaining more than fourfold before turning negative this year along with the price of Bitcoin. The stock fell 26% on Monday, the biggest drop since 2017, as Bitcoin fell as much as 11%.
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