MicroStrategy's Record $21 Billion Profit: Bitcoin Gains and Per-Share Decline

MicroStrategy, known for being the largest corporate holder of Bitcoin, announced an impressive operating profit of $21 billion for the third quarter. This remarkable figure was entirely attributed to the significant paper gains on its Bitcoin investments.

Bitcoin Gains vs. Decreasing BTC Per Share

Despite this record operating profit, the company's metric that matters most to investors—Bitcoin per share—saw a decline of 3.7% within the same year. It’s a surprising trend for a company that had also increased its total Bitcoin holdings by 26% during the same period. This situation indicates that shareholders are backed by a lesser amount of Bitcoin compared to January.

In accordance with US accounting standards, firms are required to register the fluctuations in the value of their cryptocurrency holdings each quarter, regardless of whether these assets have been sold. During the last quarter, Bitcoin experienced a surge in value, enabling MicroStrategy to recognize a staggering $20.91 billion in profit from its cryptocurrencies, resulting in a net income of $19.53 billion or $44.75 per share.

From Profit to Loss: The Impact of Accounting Rules

Contrastingly, in July, the same accounting rules had led to an $8.22 billion quarterly loss when Bitcoin prices dipped. At that time, Bitcoin per share was actually up by 4.5% year-to-date. Fast forward three months, and the situation has flipped—Bitcoin per share is now down 3.7% despite overall holdings growing.

MicroStrategy managed to raise funds amounting to $21.23 billion in 2026, primarily through the issuance of new shares. Additionally, the company sold $431.8 million worth of Bitcoin to facilitate dividends and stock buybacks. However, the issuance of new shares only increases Bitcoin per share when the stock sells for more than the underlying Bitcoin value.

Allocation of Funds and Future Plans

This year, MicroStrategy allocated $2.04 billion to buy back its preferred stock, known as STRC, which it sells for cash while providing a monthly dividend. The company has also established a $5.07 billion reserve aimed at covering approximately 3.4 years' worth of preferred dividends and interest payments.

Interestingly, their weekly Bitcoin purchases plummeted by 84% earlier this month as priority shifted to these stock buybacks. In a statement, CEO Phong Le emphasized the company's determination to restore its STRC to a healthier state.

Compounding these changes, Chief Financial Officer Andrew Kang is set to depart on November 5, with operations chief Reza Virasteh stepping into the role on January 1. Following the earnings release, shares closed at $141.62, down 2.4%, and dipped by an additional 0.8% after hours. Meanwhile, Bitcoin traded at approximately $90,600.

MicroStrategy is also venturing into what they term digital credit. They aim to launch preferred stocks that provide daily dividends starting November 1. This drop in Bitcoin per-share value suggests the financial strain of maintaining their operational goals when the stock trades below the underlying Bitcoin value.