MicroStrategy’s Strategic Bitcoin Moves: Tax Loss Harvesting and Future Gains

MicroStrategy Signals Potential Bitcoin Sale Amid Market Shifts

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In a surprising turn of events during MicroStrategy’s (MSTR) Q1 2026 earnings call on May 6, Executive Chairman Michael Saylor confirmed that the company is prepared to sell some of its substantial bitcoin holdings. This announcement marks a notable shift for the world’s largest publicly traded corporate holder of the cryptocurrency, but it’s not the first time the company has explored such a strategy.

Back in December 2022, MicroStrategy sold 704 bitcoins for approximately $11.8 million, capitalizing on a market dip at $16,776 per coin. This sale was part of a tax-loss harvesting strategy, allowing the company to carry back capital losses against previous gains, ultimately generating a tax benefit. Just two days later, MicroStrategy repurchased 810 bitcoins, demonstrating a quick rebound in its investment strategy.

As Saylor explained, “MicroStrategy plans to carry back the capital losses resulting from this transaction against previous capital gains, to the extent such carrybacks are available under the federal income tax laws currently in effect, which may generate a tax benefit.” This approach has become increasingly relevant as bitcoin prices have fluctuated dramatically.

In Q1 2026, bitcoin experienced a significant decline, dropping 23% from $87,500 to $67,700. Under the new FASB fair value accounting rules adopted on January 1, 2025, MicroStrategy is required to mark its entire bitcoin holdings to market every quarter. This led to a staggering $12.54 billion loss for the quarter, pushing unrealized losses directly through the income statement and generating a $2.2 billion deferred tax asset based on its higher cost basis holdings.

According to the earnings call, MicroStrategy has purchased over 434,000 BTC at prices above $80,000, resulting in a $7.6 billion unrealized loss and a $2.2 billion deferred tax asset at a 29% tax rate. If bitcoin prices recover, selling appreciated bitcoins could allow the company to offset future gains with the substantial tax asset it has accumulated.

The primary goal for MicroStrategy remains clear: to increase “bitcoin per share,” which is the ratio of the company’s total bitcoin holdings divided by its total diluted shares outstanding. The potential sale of bitcoin could serve multiple purposes, including retiring the $8.2 billion in convertible debt, repurchasing MSTR common stock when its market multiple falls below 1.22x, or funding $1.5 billion in annual dividend obligations from its perpetual preferred stock, Stretch (STRC).

As of this morning, MSTR shares are up 1% in pre-market trading, while bitcoin is trading above $81,000, signaling a cautious optimism in the market. Investors will be closely watching MicroStrategy’s next moves as the company navigates the volatile waters of cryptocurrency investment and tax strategy.

Disclosure: The author of this story owns shares in MicroStrategy (MSTR).