MicroStrategy Makes First Bitcoin Sale for Net Tax Benefit

• MicroStrategy has sold bitcoin for the first time since it began adding the digital currency to its treasury in 2020.
• The sale was carried out to generate a net tax benefit, with the losses involved in the sale offsetting previous capital gains.
• MicroStrategy now holds 132,500 BTC, acquired for about $4.03 billion at an average price of $30,397 per bitcoin, resulting in an unrealized loss of over $1.8 billion.

Software analytics company MicroStrategy has taken a major step in its foray into the world of cryptocurrency, making its first bitcoin sale since adding the digital currency to its treasury in 2020. The move was carried out in order to generate a net tax benefit, as the losses involved in the sale are able to offset previous capital gains, as stated in a filing with the U.S. Securities and Exchange Commission (SEC).

The sale took place on December 22, 2022 and involved 704 BTC, which was sold at an average price of $16,776 per bitcoin. Two days later, MicroStrategy bought back more bitcoin than it sold, however at a higher price –– $16,845 per BTC on the 810 bitcoin purchase. This was preceded by a larger purchase, with the firm buying 2,395 BTC between November 1 and December 21, 2022, at a cost of about $42.8 million, translating to an average price of $17,871 per bitcoin, inclusive of fees and expenses.

These transactions resulted in an increase of MicroStrategy’s bitcoin holdings by 2,500 BTC, bringing the total amount of bitcoin held by the company to 132,500 BTC. The purchase price was around $4.03 billion at an average price of $30,397 per bitcoin. As a result, the Virginia-based firm currently faces an unrealized loss of over $1.8 billion.

MicroStrategy CEO Michael Saylor has been an outspoken supporter of bitcoin and its potential to become a reserve asset for companies, and this latest move is yet another example of the company’s commitment to the cryptocurrency. As Saylor has said on numerous occasions, bitcoin is a hedge against inflation and a way to store value, and this recent sale and subsequent buyback is a testament to that. It remains to be seen if other companies will follow suit and adopt a similar strategy.

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