Strategy's Annual Report Warns of Volatile Bitcoin Market Cap or Earnings Risk and Potential Excessive Tax Liability

Bitcoin investment firm Strategy (formerly MicroStrategy) filed its 10-K annual report on 18 February, revealing that the company recorded a net loss for fiscal year 2024 due to a $1.79 billion impairment loss on digital assets. The company warned that it may not be able to return to profitability in future periods if the market value of bitcoin declines significantly and could affect its ability to meet its financial obligations. Additionally, as the company adopts the FASB's new fair value accounting rules from 1 January 2025, Strategy warned that unrealised fair value gains on its bitcoin positions could be subject to a 15% corporate minimum alternative tax (CAMT) under the Inflation Cuts Act. Unless the Inflation Reduction Act is amended or tax relief is provided, the Company may be subject to significant cash outlay obligations beginning in 2026, which would have a material impact on its financial condition.