MicroStrategy's (Strategy) annual report warns that in 2024, a significant impairment loss will be recognized due to BTC, and in 2025, large tax payments may be required under the new regulations.

Strategy (, formerly known as MicroStrategy ), issued a profit warning in its annual report on Tuesday, recognizing a $1.79 billion impairment of digital assets in 2024. In the future, due to the adoption of the accounting new standard ASU 2023-08, BTC gains can be recognized based on market value, but this may also result in a substantial tax liability. Strategy also announced a new issuance of $2 billion zero-coupon convertible bonds.

Recognition of $1.79 billion impairment of digital assets in Strategy 2024

Strategy (, originally named MicroStrategy ), incurred a net loss for the fiscal year ended December 31, 2024, primarily due to a $1.79 billion impairment loss on digital assets.

Because the Strategy has not yet adopted the new accounting standards, the book value of BTC must be recognized at the lower BTC price within the year, rather than the year-end BTC market price.

In 2024, the impairment loss on digital assets was 1.79 billion US dollars, accounting for 81.8% of the company's operating expenses, while in 2023, the impairment loss on digital assets was 115.9 million US dollars, accounting for 23.1% of operating expenses.

From the annual report, it can also be seen that even after deducting the impairment of digital assets, the annual loss of the Strategy reaches 63.12 million US dollars, and the core business does not make money.

In 2025, new accounting rules will be adopted, but large amounts of taxes may be levied.

The Strategy will be subject to the new accounting standard (ASU 2023-08) starting in 2025. Based on the value of BTC on January 1, it is estimated that up to $12.7 billion in income will be generated (retained earnings).

Previously reported that MicroStrategy may be subject to a tax rate as high as 15% under the 'Corporate Alternative Minimum Tax (CAMT)' in the 'Inflation Reduction Act ('.

The Wall Street Journal: MicroStrategy may need to pay tens of billions of dollars in unrealized BTC capital gains tax )

The report also warns that the company may need to pay relevant taxes after 2026. In order to adjust the income statement accordingly, the company needs to allocate the increased portion to retained earnings from 2025 to 2028. And further confirm whether CAMT needs to be paid and propose relevant methods for calculating any related tax liabilities for the applicable tax year.

If subject to the constraints of CAMT, the company may be required to fulfill significant tax obligations in cash, which could have a significant impact on financial results, including earnings and cash flow, as well as financial position.

Strategy is expected to raise another $2 billion in convertible bonds

Strategy announced yesterday that it is raising up to $2 billion in convertible preferred notes ( convertible bonds ) from qualified institutional buyers.

The convertible bond does not pay interest and matures on March 1, 2030. Holders have the right to convert their notes in certain situations and periods. The Strategy will settle the conversion by paying cash, Class A common stock shares, or a combination of cash and Class A common stock shares based on their choice.

This article warns that MicroStrategy's (Strategy) annual report is due to recognize large impairments in BTC in 2024, and may face significant tax payments under the new regulations in 2025. First appeared on Chain News ABMedia.