Strategy recognized a $5.91B unrealized loss on its digital assets for Q1 2025, which is expected to result in a net loss for the quarter, the company said on Monday. The stock of the company, which has amassed holdings of bitcoin on its balance sheet, sank 8.5% in premarket trading, as the price of bitcoin (BTC-USD) dropped ~7.0%.

"We may not be able to regain profitability in future periods, particularly if we incur significant unrealized losses related to our digital assets," the company said in a filing. "As a result, our results of operations and financial condition may be materially adversely affected."

Strategy, which previously did business as MicroStrategy, also said it had tax liabilities for an unrealized gain on its bitcoin holdings of ~$2.28B. Its deferred tax liabilities are partially offset by deferred tax assets, such as net operating losses and capitalized research and development costs.

If the market value of bitcoin continues to fall in future periods, its deferred tax liability related to the unrealized gain on bitcoin holdings will decrease, and "we may be required to establish additional valuation allowances against our deferred tax assets with respect to our net operating losses and capitalized research and development costs," it added. "Such increases in valuation allowances could materially and adversely affect net income in periods in which such charges are incurred."

As of March 31, 2025, Strategy had outstanding debt of $8.22B and annual contractual interest expense of $35.1M. In addition, it had outstanding $1.615B notional value of perpetual strike preferred stock and perpetual strife preferred stock, which requires the payment of $146.2M in annual dividends.

"Our enterprise analytics software business has not generated positive cash flow from operations in recent periods, and may not generate sufficient cash flow from operations to satisfy these financial obligations in future periods," the company stated.

As of April 6, 2025, Strategy (MSTR) held 528,185 bitcoins (BTC-USD), which it bought at an aggregate purchase price of $35.63B. Its average purchase price was $67,458 per bitcoin. It did not acquire any bitcoins (BTC-USD) in the week ended April 6, the company said. On April 7, at about 8:27 AM ET, the price of bitcoin was ~$77.1K, putting the value of its bitcoin holdings at ~$40.7B.