Strategy disclosed a $12.4 billion net loss for Q4 2025, up from $670.8 million a year earlier, as its Bitcoin holdings traded below the company's $76,052 average purchase price. The loss stems from an unrealized $17.4 billion digital asset write-down under U.S. GAAP rules requiring cryptocurrency to be treated as indefinite-lived intangible assets subject to impairment testing.
The accounting treatment matters: under ASC 350-60, crypto holdings are marked down when market value drops below cost, but upward revaluations are prohibited until disposal. This creates asymmetric volatility in reported earnings that doesn't reflect cash position. Strategy closed the quarter with $2.3 billion in cash and holds over 670,000 BTC.
The software business told a different story. Subscription revenue jumped 62% year-over-year to $51.8 million, and total revenues of $123 million beat consensus estimates by 2.83%. Gross margin declined to 66.1% from 71.7%, but the core operations remain profitable.
Investors aren't buying the separation of software and Bitcoin operations. MSTR stock dropped 17% on earnings day to $106.99, now down 68% year-over-year. The market's Net Asset Value premium stands at just 1.09, meaning investors value the company barely above its Bitcoin holdings alone. During rallies, that premium has reached 2.0 or higher.
Strategy has twice failed to gain S&P 500 inclusion (September and December 2025), which would bring passive institutional flows and validate the Bitcoin treasury strategy. The company maintains $4 billion available for share buybacks, though CEO Michael Saylor has prioritized Bitcoin accumulation over traditional capital allocation.
For enterprise CFOs watching digital asset accounting, Strategy serves as a case study in GAAP's treatment of cryptocurrency holdings on public company balance sheets. The impairment-only model creates headline volatility that obscures operational performance, a challenge any large organization holding Bitcoin will face under current standards. The IFRS treatment differs slightly but produces similar asymmetry.
The real question: can Strategy's software growth story survive perpetual subordination to Bitcoin price action, or does a 1.09 mNAV signal the market has stopped paying for anything beyond the underlying crypto position?