TLDR

Table of Contents

Strategy (formerly MicroStrategy) reported $5.91 billion in unrealized Bitcoin losses for Q1 2025, warning shareholders it may not achieve profitability
The company holds 528,185 Bitcoin purchased at an average price of $67,485, with holdings valued around $41.3 billion
Bitcoin price dropped to $78,200, a five-month low, amid market downturn related to Trump’s tariffs
Strategy spent $7.7 billion on Bitcoin in Q1, buying at an average price of $95,000 per coin
The company’s software business isn’t generating positive cash flow, forcing it to rely on debt and stock issuances to meet financial obligations

Strategy, the Virginia-based software company formerly known as MicroStrategy, announced on Monday that it expects no profit for the first quarter of 2025 due to massive unrealized losses in its Bitcoin holdings. The company disclosed a $5.91 billion paper loss on its Bitcoin investments in a filing with the Securities and Exchange Commission.

The company said a $1.69 billion tax benefit would partially offset these losses. Despite the setback, Strategy’s Bitcoin holdings remain unchanged at 528,185 Bitcoin, valued at approximately $41.3 billion at current prices.

“We may not be able to regain profitability in future periods, particularly if we incur unrealized losses related to our digital assets,” the company stated in its SEC filing. This marks a concerning turn for the firm that has become known as the largest corporate Bitcoin holder.

Market Downturn Hits Hard

Bitcoin’s price has tumbled to a five-month low, trading around $78,200 as of Monday. The downturn comes amid broader market concerns over U.S. President Donald Trump’s tariff policies, which have impacted risk-on assets across the board.

The cryptocurrency dropped dramatically on Sunday. It fell from around $83,000 to below $74,500 overnight before rebounding slightly on Monday morning.

The recent correction has also dragged down the Nasdaq by approximately 10.4% month-to-date. The S&P 500 is down over 7% during the same period.

Other crypto-related investments have been hit as well. Coinbase shares fell over 3% on Monday, extending its 2025 losses to 35%, while spot Bitcoin ETFs like the iShares Bitcoin Trust dropped more than 6%.

Aggressive Buying Strategy

Strategy has been on an aggressive Bitcoin buying spree in recent months. The company spent $7.7 billion on Bitcoin during the first quarter alone, purchasing at an average price of around $95,000 per coin.

Between March 24 and March 30, Strategy added 22,048 bitcoins to its holdings. These were purchased at an average price of $86,969 per coin, totaling $1.92 billion.

However, the company did not buy any additional Bitcoin between March 31 and April 7. This suggests a pause in its accumulation strategy as the market turned downward.

Since Strategy began purchasing Bitcoin in 2020, the company has spent a total of $35.6 billion on the asset. The average purchase price across all acquisitions stands at $67,485 per Bitcoin.

Based on that average price, Strategy remains up about 16.5% on its overall Bitcoin investment despite the recent market downturn. This represents a long-term gain even as short-term performance suffers.

Financial Concerns Mount

Strategy’s core business has taken a backseat to its Bitcoin strategy in recent years. The company acknowledged in its filing that its enterprise analytics software business “has not generated positive cash flow” in recent periods.

More concerning, Strategy stated the software business may not help it satisfy its financial obligations going forward. This puts increased pressure on the company’s Bitcoin strategy to deliver results.

To fund its Bitcoin purchases, Strategy has taken on $8.2 billion worth of debt. The company has issued various financial products including convertible debt and perpetual preferred stock.

Between its “Strife” and “Strike” offerings, Strategy is required to pay $146 million in dividends annually. This represents a hefty fixed obligation for a company facing profitability concerns.

Strategy hasn’t posted a profitable quarter since the fourth quarter of 2023. At that time, the company reported earnings per share of $0.32 on $124 million in revenue.

To fulfill its financial obligations going forward, Strategy said it plans to take on more debt. It may also issue common shares or conduct additional offerings of preferred stock and convertible debt.

On Monday, Strategy shares fell 10.6% to $262. While this represents a decline from last year’s peak of $543, the stock price remains above its Election Day price of $233.

Analysts polled by FactSet expect Strategy to report a loss of $0.11 per share for Q1. This would be an improvement from the $0.31 per share loss reported in the same quarter last year.

Revenue is expected to reach $116.8 million, slightly up from $114.9 million in the year-ago period. The company typically releases its first-quarter results in late April or early May.

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