Quotes of the analytical software provider MicroStrategy fell to an annual minimum against the backdrop of a published letter from the US Securities and Exchange Commission (SEC) and a fall in the price of the first cryptocurrency.
On Friday, January 21, MicroStrategy (MSTR) securities closed the trading session at $376. The fall per day was 17.8%.
In a letter dated December 3, 2021, published January 20, 2022, the SEC expressed MicroStrategy’s note on Form 10-Q for the quarterly period ended September 30, 2021.
As writes Bloomberg TaxGenerally accepted accounting principles (GAAP) in the US do not offer any rules for reporting the value of digital assets. The American CPA Institute proposed to classify cryptocurrency as an intangible asset.
According to the recommendation, the company should adjust the value of bitcoin on its balance sheet when its price decreases, but not make appropriate changes when the asset quotes increase.
MicroStrategy showed investors, what the company’s earnings would have been had it not had to make adjustments in accordance with GAAP – $18.6 million against a reported net loss of $36.1 million.
Analytical Software Provider informed The SEC is about using such measures to provide investors with a better picture of their finances.
The US Securities and Exchange Commission objected to the adjustment and ordered the company to remove it from future documents. In a letter dated December 16, MicroStrategy promised fulfill the requirement.
According to Bitcoin Treasuries, at the time of writing, the firm holds 124,391 BTC worth about $4.45 billion at a purchase price of approximately $3.75 billion.
MicroStrategy is the first public company to invest part of its own capital in digital gold. In August 2020, the analytics software provider purchased 21,454 BTC (~$250 million at the exchange rate at the time of the transaction).
On Saturday, January 22, 2022, the price of bitcoin instantly dropped to $34,000.
At the time of writing, the first cryptocurrency is trading at $35,700. The capitalization of the asset is $678 billion, according to CoinGecko.
Recall that the head of MicroStrategy Michael Saylor personally owns approximately 17,732 BTC (about $635 million at the current exchange rate).
In January he confirmed commitment to a strategy to buy and hold bitcoin, despite a 40% decline in its price from its historical maximum.
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