MicroStrategy Cites Tax Benefits in Recent Bitcoin Buying and Selling

MicroStrategy has cited tax benefits as the reason for its recent buying and selling of bitcoin.

The firm — which develops enterprise software but is also the largest corporate buyer of bitcoin — has sold bitcoins for the first time but remains a net buyer, Bloomberg reported Wednesday (Dec. 28), citing a MicroStrategy filing with the Securities and Exchange Commission (SEC).

MicroStrategy sold 704 bitcoins Thursday (Dec. 22) after having purchased 2,395 bitcoins between early November and Dec. 21, according to the filing.

While the firm paid an average of $17,871 for the coins in the November to Dec. 21 group, it sold coins on Dec. 22 for an average of $16,776 per coin. It did so for tax reasons, the report said.

“MicroStrategy plans to carry back the capital losses resulting from this transaction against previous capital gains, to the extent such carrybacks are available under the federal income tax laws currently in effect, which may generate a tax benefit,” the firm said in its filing to the SEC.

Two days after the sale of the coins, MicroStrategy bought 810 bitcoins Saturday (Dec. 24) for an average price of $16,845 per coin, the filing showed.

As of Tuesday (Dec. 27), the firm held about 132,500 bitcoins that were worth more than $4 billion at that time, having paid an average price of $30,397 per bitcoin in its entire holdings, per the filing.

In September, when filing with the SEC to sell stock to help it buy more bitcoin, MicroStrategy said its corporate strategy for the business involves acquiring and holding bitcoin, along with growing its enterprise analytics software business.

The company added at the time that the bitcoin aspect has grown its profile with some possible software customers, and the software side of the business gives it enough cash flow to buy bitcoin.

MicroStrategy said in the Sept. 9 filing that bitcoin is appealing because it “can serve as a store of value, supported by a robust and public open-source architecture, that is untethered to sovereign monetary policy and can therefore serve as a hedge against inflation in the long term.”

At the same time, as PYMNTS reported Aug. 5, bitcoin can be hazardous to the health of corporate balance sheets. Chief financial officers (CFOs) who choose to dabble in the cryptoverse are well advised to scale their positions proportionately to revenues and reserves.

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