Strategy, the cryptocurrency-focused firm led by Michael Saylor, has reported a staggering net loss of $12.4 billion for the fourth quarter. This significant financial downturn is primarily attributed to mark-to-market losses on its substantial Bitcoin holdings. The firm”s struggles coincided with Bitcoin”s price dipping below $60,000, resulting in the value of its cryptocurrency assets falling beneath its average acquisition cost for the first time since 2023, effectively erasing profits that had accumulated following last year”s U.S. election rally.
Over the years, Strategy has transitioned from an enterprise software company into a leveraged proxy for Bitcoin, leveraging a consistent premium in its stock price to finance further Bitcoin purchases. However, this approach appears to be faltering. The company has not announced any new equity issuance or debt financing alongside its earnings report, indicating a tightening of capital access as investor enthusiasm wanes.
Despite Saylor”s assurances that there are no margin calls, and that the firm maintains $2.25 billion in cash—sufficient to meet interest obligations for over two years—pressure is mounting as Bitcoin continues to trade significantly below Strategy”s reported average acquisition price of $76,052. Additionally, the company reiterated that it does not foresee generating profits in the near future.
In its fourth quarter results, Strategy disclosed it holds 713,502 BTC, which is valued at approximately $46 billion according to Bloomberg data. Although the firm acquired an additional $75.3 million worth of Bitcoin in late January, analysts are expressing concerns about the sustainability of its business model under deteriorating market conditions. Benchmark analyst Mark Palmer noted that investors are increasingly questioning whether Strategy can still raise capital for further Bitcoin acquisitions amid worsening market dynamics.
Criticism of Strategy is intensifying. Recently, investor Michael Burry cautioned that ongoing declines in Bitcoin could lead to cascading losses for corporate holders, reviving long-held concerns among short sellers regarding Strategy”s reliance on leverage and non-yielding assets. The company”s stock price has plummeted nearly 80% from its peak in November 2024, highlighting the rapid shift in market sentiment.
In a related development, BitMine Immersion Technologies has reported approximately $8.2 billion in unrealized losses due to Ethereum”s price declining to around $1,930, well below its average purchase price of $3,826. Holding about 4.29 million ETH, acquired for around $16.4 billion, BitMine has experienced a significant decrease in the value of its assets following a nearly 30% decline since early January. Despite these losses, BitMine has staked over 2.9 million ETH, generating an annual yield of about $188 million, and claims to view the market sell-off as a potential buying opportunity, even as its shares have tumbled 88% from their peak in July, mirroring the losses at Strategy.
