MicroStrategy Rebrands to "Strategy", Expects $12.75B Bitcoin Accounting Boost
MicroStrategy, the business intelligence firm turned Bitcoin-holding powerhouse, has rebranded itself as simply "Strategy," reflecting its singular focus on Bitcoin accumulation. The company is also poised to see a massive $12.75 billion boost to its balance sheet thanks to new accounting rules that allow for the recognition of unrealized gains on its Bitcoin holdings, according to analysts at Bernstein.
New Accounting Rules Unlock Bitcoin's True Value on Corporate Balance Sheets
The name change to "Strategy" and a new logo featuring a stylized Bitcoin "₿" symbolize the company's complete transformation into a Bitcoin treasury company, moving away from its original software business.
The significant balance sheet boost comes from the Financial Accounting Standards Board's (FASB) new fair-value accounting rules, which took effect in January 2025. Previously, companies had to write down the value of their crypto holdings if prices fell, but couldn't recognize gains unless they sold. Now, Strategy can reflect the market value of its Bitcoin holdings each quarter, leading to a one-time $12.75 billion upward adjustment to its retained earnings.
However, some uncertainty remains regarding the tax treatment of these gains under the new FASB rules and the 2022 Inflation Reduction Act. This could potentially require a special exemption from the IRS.
Q4 Earnings and New Bitcoin-Focused Metrics
In its Q4 2024 earnings report on Wednesday, Strategy reported a net loss of $670.8 million, with operational expenses skyrocketing 693% year-over-year to $1.1 billion. This included just over $1 billion in impairment losses related to its Bitcoin holdings before the accounting rule change.
The company introduced new key performance indicators (KPIs) to reflect its Bitcoin-centric strategy, including "BTC Yield" (the percentage change in the ratio of Bitcoin holdings to diluted shares outstanding), which stood at 74.3% year-to-date. Strategy also announced annual "BTC Gain" and "BTC $ Gain" targets, setting a goal of a $10 billion "BTC $ Gain" for 2025.
A Pause in Purchases, But the Strategy Remains
While Strategy recently ended a 12-week Bitcoin buying streak, its total holdings remain enormous: 471,107 BTC, worth approximately $46 billion, acquired at an average price of $64,511 per Bitcoin. This represents over 2.2% of Bitcoin's total supply.
The company's "21/21" plan, introduced last year, aims to raise $42 billion ($21 billion in equity and $21 billion in debt) between 2025 and 2027 to further fund Bitcoin purchases. Bernstein analysts noted that Strategy has already utilized approximately $20 billion of this plan. They also pointed out that Strategy's current leverage ratio is below its long-term target of 20-30%, leaving room for further borrowing. Despite some investor concerns about Strategy's high market capitalization premium to its Bitcoin net asset value (NAV), currently around 110%, Bernstein maintains a positive outlook.