MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

[fillippone]

A few days ago I read this news:

Michael Saylor welcomes FASB vote to review crypto accounting standards


Basically, it's very boring stuff about how Microstrategy has t o report their Digital Assets: as you know if you follow this thread, each quarter Microstrategy has to value their Bitcoin Holdings at the lower Bitcoin price revised on the current quarter, if lower than purchasing price.

This isa pretty punitive way of accounting digital goods, as it never allows for a revaluation, bar a sell of the Bitcoin.

This translated in a few losses over the years for MSTR:



In case FASB would allow a mark to market of the bitcoins, then the impairment would have to go, and Microstrategy would be able to write that 1,415 millions back into their balance sheets, for a whopping 128 USD per share.

So, watch those meetings very closely.

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[The Sceptical Chymist]

each quarter Microstrategy has to value their Bitcoin Holdings at the lower Bitcoin price revised on the current quarter, if lower than purchasing price.

This isa pretty punitive way of accounting digital goods, as it never allows for a revaluation, bar a sell of the Bitcoin.

I'll confess that I haven't read every post in this thread, so I must have missed that bit of info.  The question I have in my head without having gone back to look for the answer is whether those accounting standards apply to cryptocurrency only, or if the FASB has required them in other instances prior to the existence of bitcoin.

Either way, that does suck for MSTR.  But none of this seems to have dampened Michael Saylor's fervor, judging by some videos of him talking (and talking and talking) on Youtube.  He really is a bitcoin zealot, which I don't view as a bad thing by any means.  When CEOs of publicly-traded companies get on the air and heap praise on bitcoin, there's a part of me that just wants to jump up and cheer.

[fillippone]

I'll confess that I haven't read every post in this thread, so I must have missed that bit of info.  The question I have in my head without having gone back to look for the answer is whether those accounting standards apply to cryptocurrency only, or if the FASB has required them in other instances prior to the existence of bitcoin.

I am not an accountant, but I think this methodology applies to digital assets only. This is why Micheal Saylor has been so vocal in modifying this (well, the second most important reason).

[bitebits]

According to my Computations, MSRT is trading at a substantial discount compared to bitcoin Market Value:



Bitcoin bought by Microstrategy now accounts for the 195% of the total Market Capitalization.
Buying Microstrategy shares equals buying bitcoins at 14,691 USD!

Thanks @fillippone, recently bought some MSTR because of your data. And today is a happy day since I believe I actually own 4.085% more synthetic sats than I thought I did?

129,218 BTC / 11,286,025 shares = 0.01144938 BTC per share.

[The Sceptical Chymist]

I'm surprised no one has bumped this thread today, or maybe it's just too early in the day.

Their stock price dropped about 23.5% since the market opened an hour ago, and I'm wondering what MSTR's shareholders are thinking as regards the company's massive bitcoin investment--or at least those shareholders who bought MSTR for reasons other than it being a bitcoin investment proxy.

True, the rest of the market is sinking today, but nowhere near as much as Microstrategy.  I get that bitcoin's price has dropped roughly 17% over the course of a day, and that that reflects on MSTR's valuation, but damn....that's gotta hurt if you own the stock.

[fillippone]

I'm surprised no one has bumped this thread today, or maybe it's just too early in the day.

Too early in the day.
I started plugging numbers in my excel, but every time I look at the market, I have to update those red calculations. So I gave up.
This is going to hit MSRT balance sheets really hard on the second quarter. A with only a few days left to the end of quarter, it’s a bad news for the accounting department.

[oHnK]

I'm surprised no one has bumped this thread today, or maybe it's just too early in the day.

Too early in the day.
I started plugging numbers in my excel, but every time I look at the market, I have to update those red calculations. So I gave up.
This is going to hit MSRT balance sheets really hard on the third quarter. At least they have plenty of time to hope for a market bounce.

The red day has just started, the lowest price has hit our portfolio. I dont think it will happen in the short term because the Fed still make a tight policy to handle inflation of their country. Not only the crypto market get the bearish moment but also every risk market get the impact. This will happen more than one month, until the Fed will start relaxing their policy.

[arallmuus]

This is going to hit MSRT balance sheets really hard on the third quarter. At least they have plenty of time to hope for a market bounce.

Imagine waking up every morning looking at the current btc price and finding out that you have lost close to 1 billion because of the drop. Either way, MSTR is going to go down in history as a company that either makes the best decision by buying all those bitcoins or going to be marked as the company that makes the worst decision ever

Obviously not a fond of the later option but I have no clue of the direction we are heading right now

[Daltonik]

Strangely on twitter @CrytpoWhale writes https://twitter.com/CryptoWhale/status/1536356226409410560 ?t=dsmtYuC0oAcN-KmF1yqhAg&s=19 that MicroStrategy transferred 2089 BTC to a new wallet on June 13 in order, as he says, to get rid of bags, gives a screenshot of the transaction, but according to the service https://monitor.breadcrumbs.app/dashboard/46/transactions?fbclid=IwAR2XBKFgHZF82Jg2bskOH3RNw4SH_vczvrF4p1zPU5f0EfCrcdfQaMQg9n0 there is no transaction from the addresses associated with Microstategy, and the address from which the transaction was not the one associated with MicroStrategy starts at 1FiDbjCmAu...

[fillippone]

Ouch.
According to my computation the recent sell off in Bitcoin is going to cost huge money to MicroStrategy:



Provided we touched the minimum on Coinbase, this quarter MicroStrategy is going to report a huge 647 millions of impairment loss.
Taking the total of impairments to  1.7 Billions, or 151 usd per share.

[The Sceptical Chymist]

world is slowly accepting what we all had been shouting at top of our voice for several years. Bitcoin give safety and value to investments, which is far better than fiat

The above post in the context of the latest developments being discussed concerning bitcoin's massive crash and the potential consequences for MSTR is almost a non sequitur.  If you can look at me with a straight face and tell me that this is one of the times where bitcoin proved to be more stable than fiat, you ought to be a professional poker player.

Taking the total of impairments to  1.7 Billions, or 151 usd per share.

Oy-fuckin'-vey!  I wonder who the major shareholders of MSTR are.  Roughly 69% of them are institutions, according to the info on my brokerage site.  And I also wonder how many of them are going to stick with owning the stock.  There's also massive shorting of it as well, which can't be helping things.

[fillippone]

There's also massive shorting of it as well, which can't be helping things.

According to my insiders there is far less short interest than a few weeks back.



There is no point shorting something that is already falling. Usually shorts gather up on appreciating  assets.

[suchmoon]

I hope Saylor knows what he is doing and can survive this bearish trend not only in crypto but also in the stock market.

I might have said this once or twice or a few dozen times, but "investors" using OPM and leverage and other fiat banking/investment nonsense is not good for Bitcoin. Same goes for Bukele's "investment".

On the bright side, Bitcoin will survive this as it always does. Couldn't care less if Saylor or Bukele survive it.

[fillippone]

I hope Saylor knows what he is doing and can survive this bearish trend not only in crypto but also in the stock market.

Don’t worry for Micheal Saylor, he’s an highlander of the stock market.
Ever wondered how he ALREADY survived a 99%+ crash of Microsftategy stock price?



Because he controls the vast majority of the voting power: trough the Class B shares, with 10x voting power, he controls the 74% of the voting powers.

[fr4nkthetank]

accounting fraud ?

"In December 2000, Saylor settled with the SEC without admitting wrongdoing by paying $350,000 in penalties and a personal disgorgement of $8.3 million. As a result of the restatement of results, the company's stock declined in value and Saylor's net worth fell by $6 billion."

[The Sceptical Chymist]

There is no point shorting something that is already falling. Usually shorts gather up on appreciating  assets.

Yeah, I guess I could have phrased my statement better--I have no doubt there are fewer short positions now than there were when MSTR stock was a few hundred dollars higher, because at this point the less risk-averse short sellers have likely covered.  Last I checked, the stock had rebounded from yesterday's disaster, which was probably just that.

And then just now I woke up and saw that bitcoin had fallen further to $21,500.  Yikes!  I'll definitely be watching the stock tomorrow.

[fillippone]

Micheal Saylor thinks Bitcoin is on sale, and he is holding to their strategy :
"We don't panic, we have a strategy"



He doesn't regret anything done with Microstrategy's money and actually looking to buy more.

[arallmuus]

He doesn't regret anything done with Microstrategy's money and actually looking to buy more.

Its kinda like he is at the point of no return though, Saylor as well as Bukulele both of them dont have options left. At this point, its either they are going to keep their btc and buy more btc to average it down or sell everything but honestly its going to ruin their whole reputation if they actually choose to sell their btc out of fear of it going down even worse so yeah they are most likely going to hold and buy more

Anyway btc is currently $18,376 and its going to harm MSTR even more at this point

[salad daging]

Micheal Saylor thinks Bitcoin is on sale, and he is holding to their strategy :
"We don't panic, we have a strategy"



He doesn't regret anything done with Microstrategy's money and actually looking to buy more.

According to info from Watcher.guru Michael Saylor suffered a loss of up to $1,665 million from MicroStrategi's investment although this has not yet been realized whether it is possible that Michael Saylor will be able to survive with a sharp decline that is more severe after reaching the ATH peak.

I know he won't panic seeing the current situation even though the bear market can't prevent it, Michael Saylor can take better steps from the current situation, he can defend with a different situation.

All investments of any kind in bitcoin will be hit by a blizzard.

https://twitter.com/WatcherGuru/status/1538103581206753280?t=jQRQGFUXQaRZiTRuOkcNnA&s=19

[OgNasty]

I wonder if Saylor learned anything from Do Kwon's idiot plan to publicly telegraph giant buys of bitcoins.  The big market players literally bought into his buys, letting him pay top dollar, then shorted him into bankruptcy.  Now they seem to be targeting one company after another.  Celsius and 3 Arrows Capital seemingly becoming the latest victims.  It appears that both have been able to raise a little bit of funding to help lower their liquidation number, but the market keeps targeting it, seeking to punish those who trade on leverage.  I'm not sure the big boys will stop until they've cleared the leverage out of the system.  The timing of this happening right before ETH 2.0 and mtgox coins are distributed seems like they're creating a perfect storm again.  Typically you see this happening with bullishness during rallies, so it's a bit frightening to witness on the way down.  I expect this drop will end with a giant volume spike and a massive rebound.  So far we're seeing slow motion drops causing all sorts of pain.  That to me means there's more pain ahead in the short term.