- Strategy has reported a substantial $5.91 billion in unrealized losses for the first quarter of 2025, due to its significant Bitcoin holdings and the recent downturn in the cryptocurrency market.
- The company’s aggressive strategy of purchasing Bitcoin at higher prices has led to financial strain, raising concerns about its ability to meet financial obligations and maintain profitability in the coming periods.
Strategy, formerly known as MicroStrategy, is facing financial turmoil due to its substantial investments in Bitcoin. The company’s recent filing with the SEC reveals significant unrealized losses, raising concerns about its future profitability and financial stability.
Key Challenges for Strategy
Strategy reported a staggering $5.91 billion in unrealized losses on its Bitcoin holdings for the first quarter of 2025. This financial blow comes after the company aggressively purchased Bitcoin at higher prices. As of the report, Strategy holds 528,185 Bitcoin, valued at approximately $41.3 billion, acquired at an average price of $67,485.
However, the price of Bitcoin has fallen below $80,000, trading at around $79,000. This decline has been attributed in part to U.S. President Donald Trump’s tariff policies, which have negatively impacted risk-on assets. This decline has significantly impacted the value of Strategy’s holdings, leading to the reported losses.
The company also issued a warning, stating that its analytics software business might not generate enough cash flow to meet its financial obligations. To address this shortfall, Strategy is considering taking on more debt or issuing more stock to fulfil its financial commitments.
Between March 24 and March 30, Strategy acquired 22,048 Bitcoin at an average price of $86,969 per coin, totalling $1.92 billion in purchases. Since 2020, Strategy has invested a total of $35.6 billion in Bitcoin, with an average purchase price of $67,485 per Bitcoin. Despite recent losses, the company’s overall investment is up approximately 16.5%.
To finance its Bitcoin purchases, Strategy has taken on $8.2 billion in debt and issued various financial products, including convertible debt and preferred stock. The company must pay $146 million annually in dividends and faces tax liabilities of approximately $2.28 billion related to unrealized gains on its earlier Bitcoin holdings.
In response to Strategy’s announcement, the company’s shares fell 10.6% to $262 on Monday. While this is significantly below last year’s peak of $543, it remains above the Election Day price of $233. Analysts remain optimistic, with some expecting Q1 earnings per share of -$0.11, compared to -$0.31 in the same period last year. Revenue is expected to reach $116.8 million, up slightly from $114.9 million in the previous year.
Strategy typically announces its quarterly results in late April or early May but has not yet confirmed an exact date for its Q1 2025 earnings report. Even with the recent ups and downs, Strategy’s focus on Bitcoin still shapes its identity and keeps it seen as a go-to option for crypto investment in the public markets. Bitcoin is up 4% in the last 24 hours, with a trading volume of $70.38B.