Strategy Rebrand Comes With a Tax Twist That Could Put MicroStrategy’s ‘Never Sell’ Mantra to the Test

• Strategy could face a 15% unrealized gain tax bill on its $15.8 billion in unsold BTC.
• The firm has recorded four consecutive quarterly losses due to operational costs.
• Strategy acquired 281,887 of its 471,107 Bitcoin stash in Q4 2024.

Michael Saylor’s Bitcoin (BTC) behemoth firm, Strategy (formerly MicroStrategy) has recorded its fourth consecutive quarter of losses as the company’s ballooning operational expenses. Under new accounting rules, it may be forced to break its “never sell” mantra to meet new requirements.

Strategy Q4

As per Strategy’s Q4 2024 financial report, the company firm suffered a fourth consecutive quarterly loss marred by increasing operational costs, as well as declining revenues and profits.

Its operating expenses resulted in losses of $1.016 billion and a net loss of $670.8 million. This is a sharp fall from the firm’s net income of $89.1 million for Q4 2024.

After a fourth quarter of losses, it may be logical for Saylor to leverage at least some of its billions in BTC to shore up said losses or cover tax liabilities. However, a recent accounting rule change may spell double trouble for the firm.

Unrealized BTC Taxes

Chief Financial Officer for Strategy, Andrew Kang, has said the firm is set to adopt fresh accounting rules for crypto assets. As per the Financial Accounting Standards Board’s (FASB) new reporting standards for Securities and Exchange Commission (SEC) filings, Strategy will now need to record the fair value of BTC on its income statement.

Prior to this, Strategy’s BTC stash was classified as an “indefinite-lived intangible asset.” This required it to mark down the value of its BTC—permanently—when its USD price declined. This meant that whenever BTC’s price rebounded back up, Saylor couldn’t ever report a gain, if it had already been marked down.

Saylor often expressed outrage at the rule, and fought hard to see BTC-friendly accounting standards introduced. Ironically, the new rules put the firm in a tight position.

So far, Saylor’s “never sell” mantra has resulted in the firm amassing a stockpile of 471,107 BTC worth an enormous $46.22 billion.

Of that figure, roughly $15.81 billion are unrealized profits, which may be subject to a 15% unrealized gain tax. If the firm needs to sell BTC to cover the bill, Strategy will have another taxable event.

Strategy’s ongoing losses have somewhat offset this potential multi-billion tax bill, though the firm may still need to seek some relief from the U.S. Treasury.