MicroStrategy, the largest Bitcoin-owning software business, has released its financial statistics for the second quarter of 2021.
The company recorded a gross profit of $93.3 million, marking a noteworthy 10% rise from the previous year. However, it experienced a $18.9 million loss on its digital assets, which included Bitcoin and other cryptocurrencies.
MicroStrategy has been actively acquiring Bitcoin since the last year. The company has built over 152,000 BTC worth around $4.5 billion through earnings and debt finance.
The company holds the belief that Bitcoin is not only a superior store of value but also serves as a hedge against inflation. Consequently, it has become the primary treasury reserve asset.
MicroStrategy’s Ongoing Bitcoin Investment Journey
In July, the company completed a vast purchase, buying 467 BTC for $14.4 million. The average price per coin stood at $30,835.
This acquisition marked the latest addition in their ongoing series of transactions that initially began in August 2020 when the company first entered into Bitcoin investments.
Bitcoin’s significant surge this year has resulted in a noteworthy decline in MicroStrategy’s digital asset losses. In the first quarter, the losses dropped to $18.9 million, compared to the fourth quarter’s loss of $197.6 million.
TD Cowen had estimated that the company would generate $127.9 million in revenue, which was expected to increase by 5% compared to the first quarter. The projection was created before the release of the earnings report.
Lance Vitanza of TD Cowen provides the following analysis:
MicroStrategy represents a distinct type of company that generates cash flows in US dollars through its enterprise software products and cloud intelligence services. Moreover, it effectively channels the surplus cash flow into investing in Bitcoin.
The company raised funds for purchasing additional Bitcoin by selling some of its common stock. In June, they unveiled a plan to sell up to $1 billion worth of shares using an “at-the-market” offering, which enables them to sell shares at the prevailing market prices.
According to its earnings report, MicroStrategy had sold approximately $400 million worth of shares under this plan as of July 28.
The stock price of MicroStrategy has been volatile, reflecting the improbability of Bitcoin’s worth. It soared to an unprecedented height of $1,315 in February but subsequently declined to approximately $470 by August 2.
However, he also observed that the company’s future success or failure would heavily rely on the price performance of a single commodity. It traded based on external factors beyond the company’s control.