MicroStrategy, a leading business intelligence platform, has reaffirmed its unwavering commitment to its Bitcoin investment strategy. This announcement comes on the heels of the firm’s first quarterly profit since 2020. In Q1 2023, MicroStrategy recorded a profit of $94 million, primarily due to a one-time income tax benefit of $453.2 million.
Rising Revenue and the Role of the Income Tax Benefit
Apart from the substantial tax benefit, the company generated $121.9 million in revenue, marking a 2.2% increase compared to the previous year’s period. Phong Lee, MicroStrategy’s CEO, emphasized the company’s steadfast belief in its Bitcoin investment strategy during a May 1 statement:
“Our conviction in our Bitcoin strategy remains as strong as ever, as the digital asset environment matures. We remain disciplined on costs while investing in growth, and we will continue to execute our dual strategy of growing our business intelligence software business and acquiring Bitcoin for the future.”
Lee further highlighted that the company’s “core business” remains unaffected by short-term BTC price fluctuations.
MicroStrategy Core Business Model and Bitcoin Investment
MicroStrategy’s chairman, Michael Saylor, credited the successful quarter to effectively implementing the company’s core business model and Bitcoin investment thesis. In addition, Saylor asserted that their strategy is the “right strategy,” adding:
“It’s not easy to see what better strategy there might be. We are strong proponents of a Bitcoin strategy. And as you can see from this chart, simply acquiring and holding Bitcoin prudently is a pretty good way to outperform the market.”
Saylor also predicted that investors would soon abandon crypto assets facing regulatory scrutiny, leading to an inflow of funds into Bitcoin.
MicroStrategy’s CFO, Andrew Kang, stated that the company decreased its leverage by repaying a $161 million Bitcoin-backed loan from the now-defunct Silvergate Bank. Kang said:
“By retiring the debt, we also released all of the Bitcoin that were pledged as collateral securing the loan. It was an important and strategic transaction for us and our liability management goals.”
MicroStrategy’s Bitcoin Holdings and Market Performance
According to SEC filings, MicroStrategy acquired 7,500 BTC in Q1 2023 through two purchases on March 23 and April 5, totaling $179 million. The firm now holds 140,000 BTC, with an average purchase cost of around $29,803.
MicroStrategy’s return to profitability coincides with a 72% increase in BTC’s value during Q1, reaching approximately $28,300. However, the company’s Bitcoin investment is currently down by around 5.7%.
Since its initial investment in BTC on March 5, 2021, when it bought 91,064 BTC—65% of its current holdings—MicroStrategy has consistently demonstrated its dedication to Bitcoin.
The company recently integrated the Bitcoin Lightning Network into Saylor’s corporate email address and is developing a Bitcoin layer-2 Lightning Network-based Software as a Service tool for corporations.
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