Bitcoin holding giant Strategy (MSTR.US), helmed by Michael Saylor, reported a substantial $17.44 billion unrealized loss for the fourth quarter, driven by a market value contraction of its cryptocurrency assets, which are valued at approximately $62 billion.
The company adopted new accounting standards last year, which mandate the inclusion of the fair value of its Bitcoin holdings in its earnings, a change that has caused its performance in the first three quarters to swing wildly between massive profits and losses.
For the same period a year earlier, the company posted a net loss of $670.8 million, or $3.03 per share.
Despite the current financial strain, the company acquired an additional 1,286 Bitcoins between late December 2025 and early January 2026, bringing its total holdings to 673,783 Bitcoins.
In a recent filing with the U.S. Securities and Exchange Commission, the Tysons Corner, Virginia-based firm also disclosed that it recognized a $5 billion deferred income tax benefit in the latest quarter.
For this company, which transformed from an internet-era software provider into a highly-leveraged Bitcoin investment vehicle, the massive loss arrives at a critical juncture for its survival.
Over five years ago, co-founder and Chairman Saylor pioneered the model of "corporate treasury allocation to Bitcoin," but investors are now beginning to lose confidence in this strategy.
While the company's common stock (formerly MicroStrategy) initially outperformed benchmark indices following its strategic shift, it plummeted 48% in 2025.
The persistent stock decline has sparked market concerns that Strategy may be forced to sell Bitcoin to cover future expenses, including increasing dividend and interest payments, given that cryptocurrencies generate no yield and its software business produces limited positive cash flow.
To alleviate these concerns, the company built a cash reserve by selling common stock on December 1 last year, with its total cash holdings reaching $2.25 billion as of January 4, 2026.
Saylor began acquiring Bitcoin in 2020, positioning it as a hedge against inflation.
Amid the sharp decline in cryptocurrency prices during the fourth quarter, Saylor is not alone in facing significant losses.
Last year, numerous publicly traded companies emulated Strategy's holding strategy, amassing digital assets to attract investors seeking high-leverage crypto exposure through the stock market.
For instance, BitMine Immersion Technologies Inc. (BMNR.US), backed by Thomas Lee, saw its stock price soar during the digital asset bull market before crashing as the sector turned downward.
These companies, also subject to the same fair value accounting standards, face similar pressures from earnings volatility.
Simultaneously, investor confidence in Strategy is likely to be dealt another blow.
The company's enterprise value is on the verge of falling below the total value of its Bitcoin holdings, a phenomenon that underscores growing market skepticism about the sustainability of the "corporate treasury heavy allocation to cryptocurrency" model.
According to data compiled by the company, its current enterprise value—the nominal total value including debt and perpetual preferred stock—is approximately $61 billion.
The company's stock price has now fallen nearly 70% from its all-time high reached in November 2024, causing its mNAV—the ratio of its market capitalization and debt to the value of its token holdings—to drop to just above 1.
The premium investors were previously willing to pay for its stock was the fundamental rationale underpinning Saylor's Bitcoin acquisition strategy.