Strategy Set to Receive $12.75 Billion Boost To Balance Sheet: Bernstein

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MicroStrategy, now rebranded as Strategy, is set to receive a $12.75 billion boost to its balance sheet, according to analysts at Bernstein report. Strategy reported a net loss of $670.8 million for Q4 2024, with operational expenses soaring 693% year-over-year to $1.1 billion. This includes over $1 billion in impairment losses tied to its bitcoin holdings, up from $39.2 million in the same quarter of 2023. 

Strategy to Recognize Unrealised Bitcoin Gains

With Strategy adopting the Financial Accounting Standards Board’s new fair-value accounting rules from January 2025, this will lead to a one-time cumulative adjustment of $12.75 billion to the opening balance of its retained earnings, the Bernstein analysts noted, which will enable the company to recognize unrealized gains on its bitcoin holdings.

Analysts also noted that starting in Q1 2025, the carrying value of bitcoin will align with its market value, enabling the company to report any price increase as a gain in its net income. 

However, uncertainty looms about the tax treatment of Strategy’s bitcoin holdings under the new FASB rules in combination with provisions of the 2022 Inflation Reduction Act. ‘

Microstrategy Is Now “Strategy”

MicroStrategy rebranded to simply “Strategy” before its earnings release on Wednesday. The new logo features a stylized “₿” to represent its focus on bitcoin and its position as a bitcoin treasury company. The primary color is now orange, symbolizing energy, intelligence, and Bitcoin. 

On Monday, Strategy’s 12-week streak of buying bitcoin came to an end after it confirmed that no shares of class A common stock were sold under its at-the-market equity offering program, and no bitcoin was purchased between January 27 and February 2.