Strategy takes $8.3B hit on Bitcoin

Strategy has long positioned itself as a Bitcoin accumulation company, using investor funds to buy the cryptocurrency and avoid selling. That approach shifted recently when it sold $216 million of the crypto at a loss.

The company, formerly known as MicroStrategy, sold 3,588 Bitcoins in two batches. It offloaded 1,363 Bitcoins between June 29 and June 30 at an average price of $59,256 per coin, followed by 2,225 Bitcoins between July 1 and July 5 at an average price of $60,773 per token.

Strategy’s average purchase price for its remaining Bitcoin holdings stands at $75,476. Despite the recent sales, the company still owns 843,775 coins, making it one of the largest corporate holders of the token globally.

Why the sale?
Strategy’s Bitcoin gamble has hit a rough patch. The crypto’s nearly 50% drop from its October peak has wiped out much of the stock’s value, with shares falling 75% over the past year. It posted an $8.3 billion Q2 loss due to the decline in its crypto holdings.

The company said it used the proceeds from the sales to pay distributions on its preferred stock and rebuild part of its US dollar cash reserve. As of Sunday, that reserve totaled $2.55 billion, which helps cover preferred stock dividends and interest payments on outstanding debt.

Investors reacted negatively to the update. Strategy shares fell 4.5% to $96.29 after the market opened and have lost about one-third of their value this year.