MicroStrategy Financial Report | Q1 Digital Asset Impairment of $170 million, Appoints New CFO, Reveals Exploring Arbitrage Opportunities for Idle Bitcoin

The software developer MicroStrategy, listed on the stock exchange, has announced the appointment of a new Chief Financial Officer. The first-quarter financial report shows a Bitcoin impairment of $170 million, slightly higher than the fourth quarter of last year. Following a $205 million loan financing completed in Bitcoin, MicroStrategy also revealed plans to continue exploring similar opportunities for generating income from idle Bitcoin in the future.

Bitcoin Holding Cost: $30,700

Financial report data is as follows:

• Revenue: $1.193 billion, down 2.9% year-on-year.
• Gross profit: $93.6 million, down 6.77% year-on-year.
• Net loss: $130.8 million, up 18.9% year-on-year.
• Digital assets: Impaired by $170.1 million, down 12.36% year-on-year.

Note: Per generally accepted accounting principles, the value of Bitcoin in the financial report is recorded at the lowest price of the quarter. The financial report will only record and consolidate when the asset value falls below the purchase cost, and unless the asset is sold, the value exceeding the cost will not be separately reported.

Note: The financial report claims the data is up to 3/31, but the recorded Bitcoin holdings and average cost are identical to the data recorded after MicroStrategy announced the purchase of 4,167 Bitcoins on 4/5.

The financial report states that MicroStrategy currently:

• Quantity: 129,218 Bitcoins
• Book value: $2.896 billion
• Average cost: approximately $30,700

New CFO Andrew Kang

MicroStrategy announced Andrew Kang as the new Chief Financial Officer, replacing Phong Le, who will transition to Chief Operating Officer, effective on 5/9. Andrew Kang previously served as Executive Vice President and CFO at the tech company Greensky, Inc.

Continued Exploration of Bitcoin's Potential Returns

At the end of March, MicroStrategy's subsidiary "MacroStrategy" collaborated with crypto bank Silvergate to use $820 million worth of Bitcoin as collateral to execute a $205 million crypto loan.

MacroStrategy must maintain the loan-to-collateral value ratio (LTV) below 50%. Current CFO Phong Le emphasized that Silvergate would issue a margin call only if Bitcoin falls by another 50%, and MicroStrategy could pledge more Bitcoin to avoid this situation.

The financial report also revealed that they will conservatively continue exploring similar opportunities for idle Bitcoin yield.

The loan has an annual interest rate of about 4%, representing an interest payment of over $8 million annually for MicroStrategy, and any sought arbitrage opportunities must exceed 4% to be viable.