Disclosure: The author of this story owns shares of Strategy (MSTR).
When Executive Chairman Michael Saylor confirmed on Strategy’s ( MSTR ) Q1 2026 earnings call on May 6 that the company was prepared to sell bitcoin, it appeared to mark a shift for the world’s largest publicly traded owner of the cryptocurrency. But the move would not be unprecedented. In December 2022, Strategy sold bitcoin for tax loss purposes – the same rationale that the company now appears to be signaling to the market again.
On December 22, 2022, Strategy sold 704 bitcoin for approximately $11.8 million at $16,776 per coin, but immediately bought back 810 bitcoin two days later.
The sale was designed to reverse capital losses against previous gains and generate a tax benefit. A tax loss event.
“MicroStrategy plans to reverse the capital losses resulting from this transaction against prior capital gains to the extent such reversals are available under applicable federal income tax laws, which may generate a tax benefit”.
Bitcoin fell 23% in Q1 2026, from $87,500 to $67,700. Under the FASB’s fair value accounting rules adopted on January 1, 2025, Strategy marks its entire bitcoin holdings to market each quarter, in Q1 posted a $12.54 billion loss that pushed unrealized losses directly through the income statement and generated a $2.2 billion deferred tax asset across its holdings on a higher-cost basis.
According to the MSTR earnings call, assuming a bitcoin price of $80,000, Strategy has purchased over 434,000 BTC above $80,000, generating an unrealized loss of $7.6 billion and a deferred tax asset of $2.2 billion at a tax rate of 29%.
If bitcoin recovers and Strategy sells appreciated bitcoins, that $2.2 billion tax could offset future gains.
The primary objective of the Company is to increase “bitcoin per share”, which is the ratio of the Strategy’s total bitcoin holdings divided by its total outstanding diluted shares.
The use of the proceeds from the bitcoin sale is to retire $8.2 billion in convertible debt, buy MSTR shares 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).
MSTR is up 1% in premarket trade, while bitcoin trades above $81,000.
