Markets
What to know:
- Strategy, that paragon of fiscal virtue, once sold 704 BTC in December 2022 to weep over tax losses, only to rebuy 810 bitcoin two days later-a feat of financial acrobatics so daring it would make a circus performer blush.
- With bitcoin down 23% in Q1 2026, Strategy lamented a $12.54 billion unrealized loss, then promptly constructed a $2.2 billion deferred tax asset, as if building a fortress against the inevitable return of fortune.
Disclosure: The author of this story owns shares in Strategy (MSTR).
When the venerable Michael Saylor, that sage of silicon valleys, confirmed on Strategy’s (MSTR) Q1 2026 earnings call that the company was prepared to sell bitcoin, it was as if a thunderclap had echoed through the halls of Wall Street. Yet, this was no new venture-nay, it was a reprise of the 2022 spectacle, where Strategy, ever the clever fox, sold bitcoin to harvest tax losses, only to buy it back with the grace of a dancer on ice.
On Dec. 22, 2022, Strategy sold 704 bitcoin for a pittance of $11.8 million, a sum so trifling it could barely purchase a loaf of bread in the old Soviet days. But lo! Two days later, they repurchased 810 bitcoin, a move so cunning it would make a chess grandmaster weep with envy. The sale, they claimed, was to carry back capital losses against previous gains-a tax maneuver so convoluted it could rival the labyrinth of Daedalus.
“MicroStrategy plans to carry back the capital losses resulting from this transaction against previous capital gains,” they declared, as if reciting a sacred scripture. A tax loss harvesting event, indeed! One might say it was a dance of numbers and paper, performed with the precision of a clockmaker’s hand.
Bitcoin, that fickle lover, fell 23% in Q1 2026, from $87,500 to $67,700. Under FASB fair value accounting rules, Strategy marked its entire bitcoin holdings to market, posting a $12.54 billion loss that would make a poet weep. This loss, they claimed, generated a $2.2 billion deferred tax asset-a treasure chest for future gains, if ever they should return.
According to the MSTR earnings call, assuming an $80,000 bitcoin price, Strategy has purchased over 434,000 BTC above $80,000, a feat of fiscal folly so grand it would make a miser blush. This generated a $7.6 billion unrealized loss and a $2.2 billion deferred tax asset at a 29% tax rate-a number so precise it could only come from a spreadsheet obsessed with perfection.
If bitcoin recovers and Strategy sells appreciated bitcoins, that $2.2 billion tax can offset future gains-a financial alchemy so coveted it could turn lead into gold, if only the laws of physics allowed.
The primary goal for the company is to increase “bitcoin per share,” a ratio so arcane it would baffle even the most learned of accountants. It is the holy grail of corporate finance, a measure of success so abstract it could only be devised by a boardroom full of economists with too much coffee.
The use of proceeds from the bitcoin sale is to retire the $8.2 billion in convertible debt, purchase MSTR common stock when the multiple to net asset value falls below 1.22x, or fund $1.5 billion in annual dividend obligations from its perpetual preferred stock Stretch (STRC). A plan so intricate it would make a spider proud, yet so transparent it could only be executed by a company with a heart of gold and a mind of steel.
MSTR is up 1% in pre-market trading, while bitcoin trades above $81,000. A tale of triumph, or perhaps a prelude to tragedy, depending on the whims of the market-a rollercoaster ride where the tracks are made of numbers and the passengers are the brave (or foolish) enough to ride.
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2026-05-11 14:06