MicroStrategy’s Q1 BTC loss of $14.5 billion, continued using high-interest preferred stock financing to buy Bitcoin

MicroStrategy, the pioneer of Bitcoin reserve strategies (originally known as MicroStrategy), announced an additional $330 million to average down on Bitcoin. Last week, it again purchased 4,871 Bitcoins, bringing its total holdings to 766,970 Bitcoins. However, its average buy cost is already higher than the current market price of Bitcoin. In the first quarter, MicroStrategy recognized unrealized losses on its Bitcoin holdings of as much as $14.5 billion.

Strategy continues to add to its Bitcoin holdings

Strategy this time (3/30~4/5) raised funds by issuing:

Preferred stock STRC raised $330 million

Common stock MSTR raised $144 million

A total of $474 million was raised, and of that, $330 million was used to acquire 4,871 Bitcoins, with an average cost of $67,718. As of April 6, 2026, Strategy holds 766,970 Bitcoins in total, with a total cost of $58.02 billion and an average cost of $75,644 per Bitcoin.

Unrealized Bitcoin loss in the first quarter reached $14.5 billion

Although the company continues to increase its holdings, the financial report data also reveals the impact brought by changes in asset prices. In the first quarter of 2026, Strategy Inc recognized $14.46 billion in unrealized losses on digital assets (Unrealized Loss). As of March 31, the carrying value of its digital assets was $51.65 billion, and the cost basis of its Bitcoin holdings was higher than fair value (Fair Value). In its accounting treatment, the company reported $2.42 billion in deferred tax assets, but simultaneously recorded a valuation allowance (Valuation Allowance) of the same amount. This means that management assesses that the likelihood of realizing these tax benefits in the future is limited, objectively reflecting the impact of a single asset on the company’s overall financial statement structure.

The premium gradually disappears; MicroStrategy relies on preferred stock to keep buying Bitcoin

From a macroeconomic perspective, Strategy’s balance sheet is highly exposed to volatility risk in the digital asset market. The company’s average Bitcoin holding cost is about $75k, already higher than the incremental buying price of around $67k at the beginning of April.

At the height of the cycle, the trading price of Strategy’s stock was far above the value of the Bitcoins it held. This allowed the company to issue new shares, buy more Bitcoins, and continuously repeat this cycle. But as the premium (mNAV has been approaching 1) gradually disappears, along with tighter capital markets, this model has become increasingly difficult to sustain. Nowadays, the founder Michael Saylor relies even more on preferred stock to maintain the funding for Bitcoin acquisitions.

Selling common stock to buy Bitcoin would dilute existing shareholders’ equity. Issuing preferred stock can avoid this dilution, but it adds an obligation to pay a fixed dividend. To maintain the price of STRC, MicroStrategy keeps increasing its payout ratio; its annualized dividend yield is currently as high as 11.5%. The company has about $2.25 billion in cash reserves, enough to pay interest and dividends for more than two years.

MSTR surged more than 6% yesterday, down more than 70% from last year’s peak

Although Strategy announced the news of a significant loss before the U.S. stock market opened yesterday, as Bitcoin rose overnight to above $70k, investors apparently put the loss news out of their minds. MSTR shares jumped 6.56% yesterday and closed at $127.69. But it is still down more than 70% from last year’s peak of around $450.

For market investors, significant losses appearing on the books of large institutions may trigger potential concerns in the market about asset liquidation. Although the company can still raise funds through the market for now, changes in the long-term overall economic environment will remain a key factor affecting how its assets are priced.

This article MicroStrategy’s first-quarter BTC huge loss of $14.5 billion, continues to use high-interest preferred stock to raise funds to buy Bitcoin was first published on Chain News ABMedia.