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Strategy returned to profitability in the third quarter after a late-summer Bitcoin rally lifted the value of its digital assets by about USD 21 billion. The result ended four consecutive quarters of losses, Bloomberg reported. The company also bought another 334 Bitcoin for USD 28.7 million, bringing its holdings to a record 848,000 BTC as of Oct. 4.
The gain covered the three months ended Sept. 30. Strategy applies accounting rules requiring changes in the market value of its Bitcoin holdings to pass through earnings. Consequently, movements in the cryptocurrency’s price can produce large quarterly profits or losses without the company selling its coins.
The latest increase represents an unrealized gain. It reflects a rise in the value of assets Strategy holds, rather than cash received through sales. The company’s update placed the gain at USD 20.91 billion and estimated an associated deferred tax expense of USD 1.88 billion.
The recovery followed a difficult second quarter. Strategy reported a net loss of USD 8.22 billion for the period, including an USD 8.32 billion unrealized loss on digital assets as Bitcoin prices declined. Its holdings stood at 846,000 BTC at the end of June.
Strategy had paid an average of roughly USD 75,578 per Bitcoin, compared with a market price near USD 64,915 on June 30. The subsequent price recovery reversed the direction of its accounting gains and losses during the third quarter. Its reported earnings therefore reflected the changing value of its Bitcoin position.
Strategy purchased its latest 334 Bitcoin between Oct. 1 and Oct. 4. The acquisition extended its weekly buying streak to three weeks and pushed its holdings above the previous record. The company’s Bitcoin position was worth around USD 73 billion, based on the valuation cited in the reports.
The purchase was smaller than the 1,665 BTC addition reported a week earlier. Nevertheless, Strategy increased its total holdings after selling some Bitcoin earlier in the year to help fund payments on its preferred shares.
In its Oct. 5 update, the company stated, “Last week, we acquired 334 $BTC and repurchased USD 176M of USDSTRC.” Strategy also reported USD 5.7 billion in dollar assets as of Oct. 4.
Strategy, formerly MicroStrategy, remains the largest publicly traded corporate Bitcoin holder. Executive Chairman Michael Saylor has led its Bitcoin treasury strategy, while the company has used share offerings and other financing arrangements to support purchases. The latest acquisition added to its holdings after the third-quarter reporting period ended.
Alongside its latest Bitcoin acquisition, Strategy repurchased about USD 176 million of STRC preferred shares. STRC is one of the company’s preferred stock offerings. The transactions accompanied its efforts to fund dividend payments and interest obligations while managing its cash balances.
During the second quarter, Strategy raised USD 17.06 billion through share sales under programs allowing it to issue stock at market prices. It also built a USD 3.75 billion cash reserve intended to cover preferred dividends and debt interest.
The company raised a further USD 218.4 million by selling part of its Bitcoin holdings through a monetization program. It used the proceeds to help meet preferred dividend obligations. Chief Financial Officer Andrew Kang said the second-quarter reserve could cover preferred dividends and interest for more than two years.
Saylor said during the second-quarter results announcement that Strategy was working to establish digital credit as a new asset class.
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