Strategy posts $8.32B Q2 bitcoin loss, sells $216M in BTC

Strategy reported an $8.32 billion second-quarter loss on its bitcoin holdings and disclosed sales of 3,588 bitcoin for roughly $216 million between June 29 and July 5 to fund preferred-stock dividend payments. The company made the sales in two tranches.

Regulatory filings show Strategy sold 1,363 bitcoin between June 29 and June 30 at an average price of $59,256 and 2,225 bitcoin between July 1 and July 5 at an average price of $60,773. Including an earlier sale of 32 bitcoin, the company sold a total of 3,620 bitcoin in the second quarter.

A blockchain analytics firm estimated the recent sales locked in more than $55 million in losses relative to Strategy’s historical acquisition cost.

Strategy said proceeds from the 3,588-coin sale funded quarterly dividends on preferred stock series STRF, STRE, STRK and STRD, and the full monthly dividend for June on STRC. The company said the sales replenished part of its U.S. dollar reserve used for those payments; the reserve was $2.55 billion as of July 5.

The $8.32 billion loss reflects a decline in bitcoin’s market value that pushed the carrying value of the company’s holdings below their cost basis. Strategy disclosed that as of June 30 the cost basis of its bitcoin exceeded fair value and that it would record a valuation allowance against related deferred tax benefits and deferred tax assets, offsetting those amounts in full.

The filing noted Strategy did not sell common shares through its at-the-market equity program during the week ended July 5, and it did not repurchase common or preferred shares. The company’s $1.25 billion Bitcoin Monetization Program remained available.

Despite the sales and the writedown, Strategy bought more than 85,000 bitcoin during the reporting period and holds about 843,775 bitcoin. The company reports those coins were acquired for approximately $63.69 billion, an average of about $75,476 per coin. The recent sales were below that average purchase price.

Market participants offered differing views. Jiang Zhuoer, founder of the BTC.top mining pool, warned shareholders had approved sales of up to 20,000 bitcoin and predicted further selling pressure. Investor Bill Miller IV said the transactions could create tax-loss harvesting opportunities and demonstrate that bitcoin can be liquid enough to back corporate liabilities.

Michael Saylor has described bitcoin as a form of digital capital and has argued its future will be shaped by integration with ETFs, corporate treasuries, bank credit and collateral markets. Strategy’s filings show the company used bitcoin sales to fund dividends, service interest and maintain cash reserves.