Dragged down by Bitcoin's collapse! Strategy (MSTR.US) digital assets lost US$5.91 billion in Q1

The Zhitong Finance App learned that “Bitcoin Holders” Strategy (MSTR.US) disclosed on Monday that due to unrealized losses of US$5.91 billion in digital assets held, the company may record a net loss in the first quarter of 2025. Affected by this news, the company's stock price fell by more than 12% at the beginning of the session, while the price of Bitcoin fell by about 7% during the same period.

The company stated in a document: “If digital assets continue to generate significant unrealized losses, we may not be able to recover profits in the future period. As a result, this will have a significant negative impact on the company's operating results and financial position.”

The company, formerly known as MicroStrategy, also disclosed that unrealized gains from its Bitcoin holdings of approximately $2.28 billion resulted in corresponding tax liabilities. However, this portion of deferred income tax liabilities can be partially offset by deferred income tax assets such as net operating losses and capitalized R&D expenses.

The company added that if the Bitcoin market price continues to decline, deferred income tax liabilities associated with unrealized gains from Bitcoin positions will be reduced, and “at that time, we may need to make additional valuation provisions for deferred income tax assets relating to net operating losses and capitalized R&D expenses,” Strategy added. “An increase in such valuation provisions may have a significant negative impact on net profit for the current calculation period.”

As of March 31, 2025, Strategy's book debt reached US$8.22 billion, with annual contract interest expenses of US$35.1 million. In addition, the company also issued permanent preferred shares with a nominal value of $1,615 million, and an annual dividend payment obligation of $146.2 million.

The company said, “Recently, the enterprise analysis software business has failed to generate positive operating cash flow, and may not be able to generate sufficient cash flow in the future to meet these financial obligations.”

According to the latest position data, as of April 6, 2025, Strategy held 528,185 bitcoins, with a total purchase cost of 35.63 billion US dollars and an average cost of 67,458 US dollars per coin. The company said it did not increase its Bitcoin holdings in the week ending April 6. Based on the current Bitcoin price of 771,000 US dollars, the market value of its positions is about 40.7 billion US dollars.