Strategy Reports 1,976% Surge in Q1 Expenses, $42 Billion Loss from Bitcoin

Strategy, a prominent player in the Bitcoin market, reported a significant expansion in its first-quarter loss for 2025, primarily due to the adoption of new accounting standards. Despite the financial setback, the company remains steadfast in its strategy to increase its Bitcoin holdings through capital market operations.

The company's first-quarter revenue decreased by 3.6% year-over-year to $1.111 billion, falling short of market expectations of $1.164 billion. This compares to $1.207 billion in the fourth quarter of 2024 and $1.153 billion in the same period last year. The adjusted earnings per share for the first quarter were -$16.53, far below the analyst consensus of -$0.02, and significantly wider than the previous quarter's -$3.20 and the year-ago period's -$0.83. This loss was driven by the company's new accounting policy, which requires it to value its substantial Bitcoin holdings at market prices.

Under the leadership of Michael Saylor, Strategy has doubled its financing plans to $840 billion following the announcement of its record first-quarter loss. The company registered plans to sell an additional $210 billion in common stock and stated that a similar-sized equity plan approved in October of the previous year had been fully executed. Additionally, Strategy plans to double the size of its bond purchase program from the remaining $146 billion to $420 billion.

Strategy, along with other companies investing in Bitcoin, faces the challenge of unrealized gains fluctuations, which often result in significant swings in profitability. For Strategy, this led to a $42 billion loss in the previous quarter. The company, which transitioned from software services during the internet bubble era to a major Bitcoin investment institution, adopted the new accounting policy approved at the end of 2023. As of the first quarter of this year, Strategy holds approximately $530 billion worth of Bitcoin.

Prior to adopting the new accounting policy, the company based in Tyson's Corner, Virginia, classified its Bitcoin holdings as intangible assets, similar to patents or trademarks. This classification meant that the company had to permanently reduce the value of its holdings when Bitcoin prices fell and could only recognize gains upon selling Bitcoin.

Chief Financial Officer Andrew Kohn stated that Strategy has implemented the long-awaited fair value accounting standard for its Bitcoin holdings, increasing the opening balance of retained earnings by $127 billion. He added, "Although the company recognized an unrealized loss in the first quarter due to the Bitcoin price at the end of the quarter being $82,445, the current Bitcoin price of approximately $97,300 means that as of the end of the second quarter, the company has realized approximately $80 billion in gains based on fair value."

Strategy's operating expenses for the first quarter surged 1,976% year-over-year to $60 billion. These expenses include the company's unrealized losses on its Bitcoin assets, totaling $59 billion. For the first quarter of 2024, the impairment loss on digital assets, calculated using the cost reduction model applicable before January 1, 2025, was $1.916 billion.

In its aggressive capital operations so far this year, Strategy has raised its 2025 Bitcoin yield target from the previously guided minimum of 15% to 25%, and increased its 2025 Bitcoin yield target from the previously expected $100 billion to $150 billion. As demonstrated by the doubling of its financing plans, Saylor shows no signs of slowing down. Since the end of October last year, Strategy has announced the acquisition of tens of billions of dollars in Bitcoin almost every week, doubling its Bitcoin holdings in less than six months.