MicroStrategy CEO steps down as company takes $917M hit on bitcoin investments

Bitcoin lawyer Michael Saylor is stepping down as CEO of the software company he co-founded, MicroStrategy, and will instead assume the role of executive chairman. Saylor’s belief in Bitcoin has turned the company into a holding vehicle for cryptocurrency. The news came as the company released its second quarter results. It noted a loss of $1.062 billion, mostly due to a $917 million impairment charge based on the value of its Bitcoin holdings, which have plunged since the price peaked in November last year.

Phong Le, the current president of MicroStrategy, will replace Saylor as CEO. “I look forward to leading the organization for the long-term health and growth of our enterprise software and bitcoin acquisition strategies,” Le said in a statement to shareholders.

In 2020, MicroStrategy acquired $250 million in Bitcoin, and as of June 30, 2022, MicroStrategy reports that it currently holds $1.988 billion in Bitcoin.

Digital Assets: As of June 30, 2022, the book value of MicroStrategy’s digital assets (consisting of approximately 129,699 bitcoins) was $1.988 billion, reflecting cumulative impairment losses of $1.989 billion since the acquisition and an average book value per bitcoin of around $15,326. As of June 30, 2022, MicroStrategy’s original cost base and bitcoin market value were $3.977 billion and $2.451 billion, respectively, reflecting an average cost per bitcoin of approximately $30,664 and a market price per bitcoin of $18,895.02, respectively.

MicroStrategy’s message to investors says Saylor will continue to “oversee the company’s bitcoin acquisition strategy as head of the board’s investment committee.” It’s unclear what prompted the organizational shake-up, as Saylor has led MicroStrategy since he founded the company in 1989.

“I believe separating the roles of chairman and CEO will allow us to better pursue our two business strategies of acquiring and holding bitcoin and growing our business analytics software business,” says Saylor. “As Executive Chairman, I will be able to focus more on our bitcoin acquisition strategy and related bitcoin advocacy initiatives, while Phong will be empowered as CEO to manage all company operations. “

In April, Saylor announced that MicroStrategy would be the first company to adopt Fidelity’s bitcoin-based 401(k) retirement plan for its employees.

The Securities and Exchange Commission has opened an investigation into MicroStrategy because it objected to how the company accounted for its Bitcoin in one of its 2021 filings. As noted Bloomberg tax, Microstrategy has used non-GAAP measures to record its Bitcoin assets, which are not based on generally accepted accounting principles (GAAP). Companies generally use non-GAAP methods sparingly.

MicroStategy was also investigated by the SEC over allegations of civil accounting fraud in 2000. The SEC accused Saylor and its top executives of overstating the company’s revenues and profits after it went public in stock exchange in June 1998 through March 2000. Saylor and two of its executives settled with the agency for $11 million, neither of them “admitting or denying the Commission’s allegations”.


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