Strategy suffered a loss of 16 trillion won in the fourth quarter of last year due to the Bitcoin decline.
Michael Saylor's Strategy recorded a net loss of approximately $1.24 billion (approximately KRW 1.821 trillion) in the fourth quarter of last year as the Bitcoin (BTC) price fell below its average purchase price. The Bitcoin crash wiped out most of the gains made following the US presidential election last year.
As Bitcoin briefly fell below $60,000, the total value of the Bitcoin held by Strategy fell below its average acquisition price of $76,052 (approximately KRW 111.67 million). This resulted in a large accounting loss, and the price fell below its total cost for the first time since 2023.
Strategy, a former software company that transitioned into a Bitcoin investment firm, has consistently leveraged its equity premium to raise capital and purchase Bitcoin. However, this quarter, it announced no plans to issue equity or raise new debt, indicating a deterioration in its funding conditions.
Michael Saylor emphasized, "There are no margin calls (requests for additional collateral), and the current cash holdings of $2.25 billion (approximately 3.3021 trillion won) can cover interest expenses for more than two years." However, the company stated that it is difficult to expect future profits as the Bitcoin price remains below the acquisition price for an extended period.
Holding 710,000 Bitcoins… Doubts about the company's model
Strategy currently holds 713,502 Bitcoins, worth approximately $46 billion (approximately KRW 67.4188 trillion), according to Bloomberg. Of this, $75.3 million (approximately KRW 110.5 billion) was additionally purchased in late January. However, market experts believe Strategy's business model itself is under pressure.
Mark Palmer, an analyst at Benchmark, said, "Investors are watching to see whether Strategy can continue to buy BTC in the current market environment." He believes the company's fundraising capabilities are being tested as investor sentiment weakens.
Criticism has also grown louder. Michael Burry, known for his work on "The Big Short," recently warned that "if the Bitcoin price falls further, corporate holders could suffer cascading losses." Issues with Strategy's leveraged structure and non-performing assets, long-standing concerns raised by short sellers, have also surfaced. Indeed, Strategy's stock price has fallen over 80% from its November 2024 peak, reflecting the rapidly shifting market sentiment.
Bitmain also suffered a loss of 11 trillion won due to the Ethereum plunge.
Meanwhile, BitMine Immersion Technologies, a large Ethereum (ETH) holder, also appears to have incurred unrealized losses of approximately $8.2 billion (approximately KRW 12.0368 trillion). This is because the Ethereum price fell to $1,930 (approximately KRW 2.83 million), approximately 50% below the average purchase price of $3,826 (approximately KRW 5.61 million).
Bitmine purchased approximately 4.29 million Ethereum tokens for $16.4 billion (approximately KRW 24.786 trillion), staking approximately 2.9 million of them on the blockchain, generating approximately $188 million (approximately KRW 275.9 billion) in annual revenue. The company holds $538 million (approximately KRW 789.6 billion) in cash and has no debt. Management has stated that it views the current sell-off as a "buying opportunity." However, the stock price has fallen 88% from its July high, showing a similar trend to the strategy.
This loss underscores the critical risks that listed companies with cryptocurrency assets as their primary asset can be exposed to during market corrections. The results of Strategy, a leading provider of "Bitcoin leveraged strategies," are expected to serve as a significant signal for future corporate-led crypto investment.
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As with the strategy that estimates the average Bitcoin purchase price at $76,000, confusing the purchase price with the actual value inevitably leads to massive accounting losses during market corrections. This error is also repeated by individual investors.
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This article was summarized using a TokenPost.ai-based language model. Key points in the text may be omitted or inaccurate.
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