As of June 28, the company holds about 129,699 Bitcoin bought for about $3.98 billion, or $30,664 per coin, according to the filing. 

The Tysons Corner, Virginia-based enterprise software maker is expected to reveal a significant financial hit when it releases its second quarter 10-Q this summer, given its enormous exposure to the bellwether token, which has more than halved in value this year. 

Eoin Treacy's view

With an enterprise value of $4.3 billion almost the entire notional value of MicroStrategy is tied to an unprofitable bitcoin position. It is far from the only company to be underwater on its bitcoin purchases.


For example, Block (Square) owns about 8000 bitcoins with an average purchase price of $27,400. The first batch was purchased at a price of $10,600 but the second batch was purchased at $51,200.

That helps to illustrate managing investment positions is not something company boards are particularly well suited to. The biggest threat to any investment, particularly when initiated at a favourable position, is to buying much more at unfavorable levels. Block spent $50 million on its first purchase and $170 million on the second one. That had a disastrous impact on the average purchase price.

Never mind that the bitcoin position is only 5% of the balance sheet. The bigger point here is that many of the highest profile largest investors in cryptocurrencies are nursing significant losses. They are totally invested in the idea that halvenings result in 10X multiplication factors and holding periods of four years always result in positive returns.

Most investors believe crypto whales have very low basis costs and will never sell which keeps supply thin. The reality is prices can’t multiply without someone selling. Weight of money allowed prices to float higher and fresh rounds of new money will be required to recapture the heights around $60,000.

Bitcoin remains under pressure and closed near the psychological $20,000 again today. This remains a consistent medium-term downtrend.