Strategy Q2 Bitcoin unrealized gains 14.05 billion USD, since adopting BTC strategy stock price rise over 3300%

Abstract:

Due to the rebound in Bitcoin prices and recent changes in accounting standards, Michael Saylor's Strategy achieved an unrealized gain of $14.05 billion in the second quarter. The company holds approximately $65 billion in Bitcoin, making it the largest corporate holder of the cryptocurrency, and it increased its holdings by about $6.8 billion in the three months ending June 30. Since Seller began purchasing Bitcoin in mid-2020 to hedge against inflation, the stock price of Strategy has soared over 3300%.

Bitcoin rebound and accounting changes drive massive unrealized gains According to Bloomberg, due to the rebound in Bitcoin prices and recent changes in accounting rules, Strategy, led by Michael Saylor (formerly MicroStrategy), recorded unrealized gains of up to $14.05 billion in Bitcoin in the second quarter. The company disclosed in a filing with the U.S. Securities and Exchange Commission (SEC) on Monday that this gain was partially offset by related deferred tax expenses of $4.04 billion. Notably, this is the company's first week without increasing its Bitcoin holdings since April. Currently, Strategy holds approximately $65 billion worth of Bitcoin, maintaining its position as the largest corporate Bitcoin holder globally.

Transformational Journey: From Software Vendor to Bitcoin Leverage Giant Saylor has successfully transformed this once-struggling enterprise software manufacturer into a leading Bitcoin leveraged investment vehicle through the issuance of common stock, preferred stock, and debt financing. On Monday, the company announced an increase to a "market-priced offering" (ATM) sales plan for its third round of preferred stock that began issuance earlier this year, aimed at funding continued Bitcoin purchases. Data shows that in the three months ending June 30, Strategy increased its holdings by approximately $6.8 billion in Bitcoin.

Profit Giants vs. Software Business Margins Although Strategy's quarterly unrealized gains may place it among the Wall Street elite like Amazon and JPMorgan, which have single-season profits exceeding $10 billion, analysts surveyed by Bloomberg predict that its core software business revenue is expected to be only $112.8 million. The company plans to officially release its second-quarter financial report in August.

Stock price surges: Far surpassing the rise of Bitcoin and the market Since Saylor began investing in Bitcoin as an inflation hedge in mid-2020, the share price of Strategy has skyrocketed over 3300%. During the same period, Bitcoin's increase was about 1000%, while the S&P 500 index rose only about 115%. In the second quarter alone, Strategy's share price increased by 40%, significantly outperforming the S&P's 11% rise.

Key Turning Point: Changes in Bitcoin Accounting Treatment Rules In the first quarter, Strategy adopted new Bitcoin accounting standards that require the real-time assessment of its Bitcoin holdings at market value. This means that Strategy and other corporate Bitcoin holders now need to recognize unrealized book fluctuations, which often lead to volatile earnings. Due to this impact and a 12% decline in Bitcoin during the quarter, Strategy recorded a record $4.2 billion loss in the first quarter.

Old Guideline Restrictions: Only Impairment, No Appreciation Before this accounting change, the Strategy classified its Bitcoin holdings as similar to intangible assets such as patents or trademarks. This classification forced the company to permanently impair the asset value when the Bitcoin price fell below historical cost. Meanwhile, appreciation gains could only be recognized upon actual sale of the tokens.

Market data shows that the price of Strategy is currently reported at $395.67, down 2.06% today, with a market capitalization of $110.527 billion.