The company Strategy, formerly known as MicroStrategy, has published a report to the U.S. Securities and Exchange Commission (SEC), indicating an unrealized loss of $5.91 billion for the first quarter of 2025. The firm stated that it will end this period with a net loss and plans to finance its operations by raising additional funds.
This is reported by Finway
Amid a 9% drop in the company’s stock on the daily market, this situation has raised concerns among investors. The report noted that the unrealized loss was a result of investments in Bitcoin; specifically, as of March 30, 2025, the company held 528,185 BTC, which were purchased at an average price of $67,458.
Implications of New Accounting Standards
According to the new accounting rules for crypto assets that came into effect on December 15, 2024, cryptocurrency is reported on the balance sheet at fair value, which takes into account unrealized gains or losses. As a result, the Bitcoins acquired by Strategy in Q1 2025 are now valued at $6.38 billion, creating an unrealized loss of $1.27 billion.
The company’s report emphasizes that due to a 12% decrease in the price of Bitcoin during the period, the total unrealized loss reached $5.91 billion. At the beginning of the year, the company’s portfolio was valued at $41.7 billion, but by the end of the quarter, due to the decline in value, it decreased to $43.5 billion.
Financial Obligations and Outlook
According to the information in the report, the company has deferred tax liabilities amounting to $2.28 billion, which may also impact net income in the future. As of March 31, 2025, the company’s debt stood at $8.22 billion, with servicing costs exceeding $35 million per year.
“We may find ourselves unable to restore profitability in future periods, especially if we incur significant unrealized losses related to our digital assets. As a result, this could have a substantial negative impact on our operating results and financial condition,” the report states.
The company plans to cover its operating expenses by issuing new shares and bonds; however, this strategy may be complicated by the current market downturn.