Microstrategy Bought Bitcoin In 2Q As Tesla Was Selling

Analytics software company and corporate bitcoin hoarder Microstrategy purchased 481 million bitcoin for $10 million in the depths of the so-called crypto winter, buying the currency in a quarter that saw carmaker Tesla
TSLA
sell down its holdings.

The company also said CEO Michael Saylor will step down after 30 years heading the business, though he’ll remain as executive chairman. He will also continue to serve on the bitcoin mining council, a global forum of bitcoin miners geared towards promoting the bitcoin network.

In the absence of exchange-traded funds for bitcoin, Microstrategy shares have become a means to gain exposure to cryptocurrency through traditional investment channels. Acquiring and holding bitcoin is one of two corporate strategies for the company, second only to its analytics software business. Microstrategy remains committed to acquiring bitcoin, Saylor said.

“We are still early in the adoption cycle of digital assets, and Bitcoin
BTC
in general, there is clearly a strong demand around the world, for a number of things,” Saylor said on a conference call to discuss the Q2 results, which included a $918 million impairment charge to earnings, largely related to diminished cryptocurrency values. “First of all, A) a digital property to serve as a long-term store-of-value asset, B) a digital commodity to serve as a trading alternative to energy, metals and other physical commodities, C) a digital payments network that’s open, neutral, fast, and free for all to use.”

Microstrategy has been investing heavily in bitcoin since August 2020, and Elon Musk’s Tesla followed in January 2021 when the company purchased $1.5 billion worth. But Tesla sold 75% of its bitcoin in Q2, adding $936 million in cash to its balance sheet. The impairment for Tesla as a result of bitcoin’s recent tumble is unclear. The company still owns $218 million worth of digital assets.

Saylor’s conviction of bitcoin’s long-term value hasn’t protected the company’s bottom line. The company posted a $1.06 billion loss in the second quarter versus a $299 million shortfall a year earlier. Microstrategy generated $122 million in revenue, $96 million in profit, from its software business through product, subscription and other services.

Bitcoin has faced a harsh recoil from its pandemic era heights, the original crypto is down 66% from the all-time-high price of $68,721 in November 2021. Microstrategy is not insulated from this downfall, the value of the company’s digital asset holdings has fallen to $2 billion from $2.9 billion, leading to the impairment.

Microstrategy may also be a vehicle for shorting bitcoin as well as gaining exposure: 51% of the company’s available shares are currently sold short. Microsoft
MSFT
ended Tuesday trading at $278.26, down 50% for the year.