Inside Strategy’s Bitcoin Exposure: What $6B in Unrealized Losses Means

Key Takeaways

• Strategy’s unrealized loss applied only to Bitcoin bought in Q1 2025 and not the entire portfolio.
• At current Bitcoin prices of $88,400, the firm holds approximately $10.7B in unrealized gains across its 534,741 BTC on April 22, 2025.
• Strategy adopted FASB’s ASU 2023-08 in January 2025, and now reports quarterly unrealized gains and losses on Bitcoin at fair market value.
• Strategy resumed BTC accumulation in April, signaling ongoing confidence in  Bitcoin.

Strategy, formerly MicroStrategy,  reported unrealized losses on its Bitcoin holdings worth $5.91 billion in Q1 after spending about $7.66 billion buying 80,715 BTC during the first quarter of 2025. The public company had not purchased any new BTC in the first week of Q2 2025, leaving its Bitcoin total holdings at 528,185 BTC valued at over $43 billion as of March 31, 2025.

Strategy disclosed that the losses are solely from Bitcoin acquired in Q1 2025 at an average price of $94,922. However, the remainder of Strategy’s 528,185 BTC—accumulated over the past five years at an average cost of $67,458 per coin, which is currently up by nearly $10.7 billion, based on Bitcoin’s April 22, 2025, price of $88,400.

So, while Q1 looked like a setback on paper, Strategy’s broader Bitcoin position remains profitable and intact, with accounting rules, not fundamentals, driving the quarterly loss.

Strategy’s Temporary Pause and Swift Return to Bitcoin Buying

Strategy did not purchase any new Bitcoin between March 31 and April 4, due to a temporary lack of demand for its Class A common stock (MSTR) and STRK, its perpetual preferred share offering, according to an SEC Form 8-K filing . 

A Form 8-K is a report that public companies must file with the U.S. Securities and Exchange Commission (SEC) to disclose major events that shareholders must be aware of.

However, the pause was short-lived. Between April 14 and April 20, the company resumed its Bitcoin accumulation strategy, acquiring 6,556 BTC for approximately $555.8 million, at an average price of $84,785 per BTC. These purchases were funded through the sale of 1.76 million shares of MSTR and 91,000+ STRK shares, raising a total of $555.5 million in proceeds.

As of April 22, Strategy holds approximately 534,741 BTC , purchased at an average cost of $66,631, with a total investment of $36.47 billion. At Bitcoin’s current price of $88,400, the company’s holdings are valued at over $47 billion, representing nearly 2.6% of Bitcoin’s fixed 21 million coin supply.

How Strategy’s Bitcoin Holdings Affect MSTR’s Performance

Strategy trades under the ticker MSTR, but its performance is deeply tied to Bitcoin . With over 534,000 BTC on the balance sheet, the stock behaves more like a Bitcoin derivative than a pure software play.

This deep exposure means MSTR rises faster than BTC in a bull market, but it also bleeds harder during corrections, making it a high-beta crypto equity proxy.

Drawbacks of Strategy’s Bitcoin Accumulation Strategy

While the headline numbers are impressive, there are key risks to be considered:

• Convertible debt & dilution: Saylor has funded many BTC buys with convertible bonds and equity offerings, raising dilution risk.
• Yield drag: Bitcoin does not earn, but preferred shares offer 8–10%. This forces Strategy to keep raising capital to meet yield commitments. The dividend is, however, subject to the board’s approval every quarter.
• Core business weakness: Strategy’s legacy software business has historically contributed modest gross profit, which is insufficient to fund large-scale Bitcoin acquisitions primarily financed through equity and debt offerings.
• Volatility fatigue: Institutional investors may grow weary of quarter-to-quarter financial volatility.

The $6 Billion Question: Risk or Opportunity for Strategy?

Strategy’s $5.91 billion unrealized loss in Q1 2025 may seem alarming, but it stems from a specific set of factors:

• Price decline: A 12% drop in Bitcoin’s value during the first quarter of 2025.
• High entry point: Strategy purchased Bitcoin at an average price of $94,922 per coin, near Q1’s high, before it dropped below $84,000, resulting in a $5.91 billion unrealized loss.

Crucially, this unrealized loss pertains only to Bitcoin acquired during Q1. The remainder of Strategy’s holdings acquired over five years at significantly lower prices remain profitable.

Rather than signaling a failed strategy, the Q1 loss highlights the short-term limitations of current accounting rules. In contrast, Strategy’s continued buying activity suggests a long-term view that remains firmly in place.

How ASU 2023-08 Changes Strategy’s Bitcoin Accounting and Why It Matters

In January 2025, Strategy adopted the Financial Accounting Standards Board’s new rule, ASU 2023-08, which requires companies to measure crypto assets like Bitcoin at fair value. 

Unlike the previous Generally Accepted Accounting Principles (GAAP) impairment model, where only losses were recorded and gains were ignored unless the asset was sold, the new standard mandates that both unrealized gains and losses are reflected in net income each quarter. 

This change allows Strategy to more accurately reflect the market value of its Bitcoin holdings and brings greater transparency to its financial reporting . The company also applied a $12.745 billion cumulative adjustment to its retained earnings on January 1, 2025, reversing prior impairments under the old model to align with the new rule.

While the new standard improves alignment between reported value and market reality, it introduces greater earnings volatility, particularly for companies like Strategy, which hold large and fluctuating positions in Bitcoin. 

As Strategy continues to increase its Bitcoin holdings, the impact of fair-value adjustments is expected to become even more pronounced in future earnings reports.

How Strategy Fits into Bitcoin’s Four-Year Cycle 

Bitcoin tends to follow a four-year halving cycle, broadly broken down into:

• Year 1: A bear market pushes Bitcoin’s price down significantly. 
• Year 2: A period of accumulation at the lows.
• Year 3 (now): Expansion and breakout of price closer to prior all-time-highs
• Year 4: Blow-off top after spending a period in price discovery mode.

Strategy timed its most significant Q1 purchases during the beginning of this expansion phase, in quarter one of 2025, a high-risk, high-reward window that coincides with the fourth year within the four-year cycle. If history repeats, the move may age well. If it doesn’t, the Strategy could come under heavier scrutiny.

Drawbacks of Strategy’s Bitcoin Accumulation Strategy

While the headline numbers are impressive, there are key risks to be considered:

• Convertible debt & dilution: Saylor has funded many BTC buys with convertible bonds and equity offerings, raising dilution risk.
• Yield drag: Bitcoin does not earn, but preferred shares offer 8–10%. This forces Strategy to keep raising capital to meet yield commitments. The dividend is, however, subject to the board’s approval every quarter.
• Core business weakness: Strategy’s legacy software business has historically contributed modest gross profit, which is insufficient to fund large-scale Bitcoin acquisitions primarily financed through equity and debt offerings.
• Volatility fatigue: Institutional investors may grow weary of quarter-to-quarter financial volatility.

Will Strategy Sell or Double Down on Bitcoin?

If history is any guide, Strategy won’t be selling Bitcoin anytime soon. In fact, the April 14–20 purchase of 6,556 BTC reinforces the opposite—Strategy remains all-in.

However, this aggressive accumulation during a volatile phase also raises the stakes, especially if Bitcoin deviates from its historical cycle.

Conclusion

Strategy’s Q1 report made headlines with its $5.91 billion unrealized loss, but a closer look reveals a more nuanced picture. The loss was tied exclusively to Bitcoin purchased during Q1 2025, which temporarily declined due to the newly adopted FASB fair-value accounting rules. 

In contrast, the company’s broader Bitcoin strategy, accumulated over five years at significantly lower cost bases, remains firmly profitable, with unrealized gains exceeding $10.67 billion.

By adopting ASU 2023-08, Strategy has embraced transparency in crypto reporting, even at the expense of earnings volatility. Whether viewed as bold or reckless, the company’s approach continues to shape the playbook for corporate Bitcoin treasury management. 

With ongoing accumulation and clear long-term conviction, Strategy is not merely reacting to quarterly fluctuations—it’s executing a generational bet.

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