MicroStrategy’s Hoards BTC in Q2; Investment Giant Buys Stake in Firm

• Bitcoin halving powers BTC purchases, with MicroStrategy buying 12,333 BTC worth $347 million.
• BlackRock owns 6% of MicroStrategy, purchased at over $150 million.
• MicroStrategy’s digital asset impairment losses are due to the decrease in Bitcoin’s price compared to its acquisition cost.

The upcoming Bitcoin halving has encouraged a wave of BTC purchases across all crypto institutions. According to reports, Michael Saylor’s MicroStrategy bought 12,333 BTC, worth $347 million, between April and June. However, an investment giant can also profit from this purchase.

In the second quarter, MicroStrategy reported an impairment charge of $24.1 million on its bitcoin holdings, contrasting with the $917.8 million charge in the same quarter last year and a $18.9 million charge in Q1, as stated in the company’s most recent earnings report. The company also acquired an additional 467 BTC for $14.4 million in July. Meanwhile, during the second quarter, Tether acquired 1,529 bitcoins at an approximate value of $45.4 million.

However, Web3 firms aren’t the only institutions chasing Bitcoin. Major banks and financial institutions in the U.S. are growing their exposure to Bitcoin through a significant accumulation of MicroStrategy shares. Even before BlackRock filed for BTC ETFs, the world’s largest asset manager, BlackRock acquired shares worth over $150 million, resulting in a substantial 6% stake in MicroStrategy.

Simultaneously, Bank of America, managing more than $3 trillion in assets, spent $59.5 million to acquire a 2.3% stake in MicroStrategy. Fidelity, managing a portfolio of assets worth $4.5 trillion, spent over $25 million to secure a 1% stake in Saylor’s company.

Amidst companies hoarding the world’s leading crypto, experts suggest that MicroStrategy’s digital asset impairment losses are a result of the decrease in the price of bitcoin compared to the price at which the bitcoin was originally acquired.

As per the current accounting rules, the value of digital assets, including cryptocurrencies, must be initially recorded at their acquisition cost and only adjusted if their value is impaired or decreases. However, any increase in value is not reported unless the asset is sold.

At the time of writing, Bitcoin is reading at $29,150.25, according to data from CoinMarketCap. The next BTC halving is scheduled on April 26, 2024. The halving occurs roughly every four years, reducing the reward for mining a new block from 6.25 to 3.125 Bitcoins, occurring after the mining of every 210,000 blocks.