MicroStrategy, now rebranded as Strategy, has long been recognized for its bold approach to Bitcoin investment. Under the leadership of Executive Chairman Michael Saylor, the company has transformed from a business intelligence software firm into the largest corporate holder of Bitcoin. However, recent financial reports indicate that this aggressive strategy has led to significant challenges, especially amid fluctuating cryptocurrency markets and global economic uncertainties.
Q1 2025: Huge Losses Hit the Company
In the first quarter of 2025, which ended on March 31, MicroStrategy reported a net loss of $4.22 billion, or $16.49 per share. This is a significant increase compared to past quarters and marks the fifth quarter in a row that the company has reported losses.
The main reason for the loss is the drop in Bitcoin’s value. By the end of March, the price of one Bitcoin fell to $82,445, leading to a huge unrealized loss of $5.91 billion on Strategy’s Bitcoin holdings.
Unrealized losses mean the company hasn’t sold the Bitcoin yet, but on paper, their value has dropped. This loss was enough to push the company deep into the red, despite any earnings from its other businesses.
Bitcoin Holdings Keep Growing Despite Losses
Even with these major losses, MicroStrategy is not stepping back from Bitcoin. In fact, the company continues to buy more. As of April 28, 2025, Strategy held 553,555 Bitcoins, worth about $37.9 billion.
To support these purchases, Strategy announced a new $21 billion at-the-market equity offering. This means the company is planning to sell more shares to raise money, which will likely be used to buy even more Bitcoin.
Michael Saylor, the company’s executive chairman and one of Bitcoin’s biggest supporters, has made it clear that he sees Bitcoin as the best long-term store of value, even better than cash or gold. He believes that owning more Bitcoin will pay off in the future.
Revenue from Software Business Declines
While Bitcoin is now Strategy’s main focus, the company still sells software and business intelligence services. Unfortunately, revenue from those services is also falling.
In Q1 2025, Strategy’s total revenue was $115.2 million, a 5% drop from the same period last year. Product support services, which are a big part of the company’s software business, saw a 3% decline in revenue. License revenue dropped even more, by 13%.
This shows that MicroStrategy is becoming more and more dependent on Bitcoin’s performance rather than its original software business.
Stock Price Remains Strong For Now
Despite the financial losses, investors still seem to have confidence in Strategy’s long-term plan. Since the beginning of 2025, the company’s stock price has gone up by 32%.
This is surprising, especially considering that the Nasdaq 100 index (which includes many large tech companies) has dropped nearly 6% in the same time.
The rising stock price may reflect investor belief in Bitcoin’s future value, or it may be a sign that people expect Bitcoin to rise again. However, if Bitcoin prices drop further, this confidence could change quickly.
Tax Troubles Ahead?
Another challenge for MicroStrategy is the possibility of a large federal tax bill. Under a rule from the Inflation Reduction Act of 2022, companies may have to pay taxes on unrealized gains, meaning they could owe money even if they haven’t sold any Bitcoin yet.
MicroStrategy may face taxes on $18 billion in unrealized Bitcoin profits, which could result in a bill of several billion dollars. The company is hoping the IRS (Internal Revenue Service) will provide guidance that exempts crypto from this rule, but so far, there has been no final decision.
If the tax rules don’t change, this company may have to sell Bitcoin to pay the taxes—something the company has been trying to avoid.
Market Risks and Global Tensions
MicroStrategy is also affected by global news and politics. In April 2025, Bitcoin dropped below $80,000 after China responded to trade tariffs from former President Donald Trump. The news shook global markets, causing investors to sell off risky assets like cryptocurrency.
During this time, many smaller tokens also dropped, and Strategy’s share price fell by 8.7% in a single day.
This shows just how sensitive its value is to Bitcoin prices and global events. Any bad news in the crypto world—or global politics—can have a big impact on the company’s financial health.
What’s Next for Strategy?
Strategy is taking a big risk by putting so much of its value into Bitcoin. If Bitcoin prices rise in the future, the company could earn massive profits. But if the price keeps falling, MicroStrategy could face more losses and possibly run into cash flow problems.
At the same time, the company is dealing with falling software revenues, possible tax issues, and increasing pressure from investors and regulators.
The next few months will be critical for MicroStrategy. Investors will be watching closely to see whether the company can survive this period of financial stress, or whether it has bet too much on Bitcoin.
