Strategy Estimates $20.91 Billion Bitcoin Gain For Third Quarter And Releases $4.12 Billion Tax Reserve
An 8-K shows a $4.12 billion tax asset write-down reversed, cutting estimated deferred tax expense to $1.88 billion, in unaudited figures.
Strategy estimates a $20.91 billion gain on digital assets for the third quarter, according to an 8-K filed Monday. The same filing says bitcoin's price rise let the company release a $4.12 billion valuation allowance on a deferred tax asset.
What the 8-K says about the quarter
For the three months ended September 30, Strategy estimates the $20.91 billion gain came with $1.88 billion of associated deferred tax expense. It puts the digital asset carrying value at $70.82 billion and the net deferred tax liability on its bitcoin at $1.88 billion.
At September 30, the fair value of its bitcoin exceeded its cost basis. As a result, the $4.12 billion deferred tax asset it carried at June 30 against bitcoin losses was reversed, and the valuation allowance against it was released. A valuation allowance is a reserve that a company sets against a tax asset it may not be able to use.
The release produced an income tax benefit of about $4.12 billion. That cut estimated deferred tax expense from approximately $6.00 billion to $1.88 billion. The figures leave out deferred tax assets, and their allowance, tied to the company's software operations.
The numbers were prepared by management. KPMG LLP, the company's auditor, has not audited or reviewed them.
Bitcoin and preferred stock activity since September 28
From October 1 to October 4, Strategy bought 334 bitcoin for $28.7 million. It paid with $15.7 million of net proceeds from selling MSTR stock and $13.0 million of cash. Holdings stood at 848,000 bitcoin at October 4, bought at an aggregate cost of $75,440.7 million, or an average of $63.97 per the filing's table.
The company sold 92,894 MSTR shares in that window. No preferred shares were sold under the at-the-market program in either period shown.
It also repurchased 740,634 STRC preferred shares for $73.7 million, all funded with cash. That follows 1,033,168 STRC shares repurchased for $102.6 million from September 28 to September 30. About $547.2 million remains available under the preferred repurchase program as of October 4.
Cash reserves and the stock
The USD Reserve, which supports preferred dividends and debt interest, was $4.88 billion at October 4. USD Cash was $833.4 million. Between September 28 and October 4, the company used $142.5 million of the reserve for dividends and interest, and $154.1 million of cash for STRC repurchases.
MSTR shares traded at $164.94 in Monday pre-market trading, up 3.08% from Friday's close of $160.01 (market data).
The formal third-quarter results will replace these unaudited estimates.
Strategy's formal third-quarter results will replace these estimates, which KPMG has not reviewed.
Sources
- 8-K Filing — Strategy Inc (MSTR) — SEC EDGAR
- Bitcoin Analyst: 'Only Michael Saylor' Can Do Strategy's Treasury Model — benzinga.com
- Strategy (MSTR) Moved 3,568 BTC In Hours And Investors Want Answers — Yahoo Finance
