Michael J. Saylor co-founder and current Chairman of MicroStrategy a whose main service is to provide business intelligence, and also offer plenty of other digital services, such as mobile software and cloud-based services, has reiterated its commitment to its Bitcoin investment strategy, as the one-time tax benefit helped the company to achieve an important profit in the first quarter of 2023.
BTC posted its first quarterly profit since 2020 and that produced that the Michael Saylor-founded firm returned to green numbers in Q1 2023 with a USD 94 million profit, which was largely attributed to a one-time income tax benefit of USD 453.2 million.
Phong Lee, the firm’s CEO, explained in his May 1st statement that MicroStrategy’s “conviction” in its Bitcoin investment strategy continues to be “strong” as ever. He pointed out that: “Conviction in our bitcoin strategy remains strong as the digital asset environment continues to mature.” In addition to the tax benefit, the firm collected USD 121.9 million in revenue, up 2.2% from the same time last year.
Andrew Kang, the firm’s CFO said that the firm also managed to reduce its leverage by repaying its USD 161 million Bitcoin-backed loan from the now collapsed Silverage Bank. He explained that in the first quarter, we strengthened our capital structure by reducing leverage through the full repayment of our bitcoin-backed loan.
According to previous U.S. Securities and Exchange Commission (SEC) declarations, the business intelligence firm purchased 7,500 BTC in the first quarter in two purchases on March 23 and April 5 for a total of USD 179 million, according to a bar chart showing MicroStrategy’s Bitcoin accumulation by quarter provided by MicroStrategy.
The company now owns 140,000 BTC, which were collectively purchased at an average cost of about USD 29,803 and its gains come as BTC rose 72% during the first quarter to USD 28,300.
Will Bitcoin’s Price Hold at USD 28,000?
Bitcoin price failed to start a recovery wave above the $29,000 resistance zone, but extended its decline and traded below the $28,200 support zone.
Two indicators remain solid despite the 5% pullback. With the current BTC price at USD 28,100, MicroStrategy has lost 5.7% of its investment in bitcoin. However, the firm was in “green” for a period of time last month when BTC soared to its most recent high of USD 30,980 on April 15.
The price even broke the $28,000 level and tested $27,650. A low is formed near $27,664 and the price is now consolidating losses. It is trading near the $28,000 resistance zone. There is also a major bearish trend line forming with resistance near $28,000 on the hourly chart of the BTC/USD pair.
The software analytics firm began investing its cash reserves in BTC on March 5, 2021, when it bought 91,064 BTC, 65% of its total holdings today.
On the other hand, Saylor recently revealed that MicroStrategy has integrated Bitcoin Lightning into its corporate email address, which is a protocol ‘layered’ on top of the Bitcoin blockchain. According to experts, Bitcoin can function without the Lightning Network, but the Lightning Network cannot function without Bitcoin.
The Bitcoin-savvy firm is also in the process of developing a Software as a Service tool based on the Bitcoin layer two Lightning network for corporations.
By Marina Meza
