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MicroStrategy CEO Michael Saylor speaks at the Bitcoin 2021 Convention, a crypto-currency conference held at the Mana Convention Center in Wynwood on June 04, 2021 in Miami, Florida.
Joe Raedle | Getty Images

Shares of MicroStrategy tumbled 17.8% Friday afternoon after the U.S. Securities and Exchange Commission reportedly rejected the company’s bitcoin accounting strategy.

The business-intelligence software company’s stock had been falling in tandem with the price of bitcoin, which dropped more than 10% Friday to its lowest point since August. MicroStrategy shares are down 24.7% for the week.

A filing released Thursday showed the SEC rejecting the accounting method MicroStrategy was using for bitcoin in its earnings reporting.

“We note your response to prior comment 5 and we object to your adjustment for bitcoin impairment charges in your non-GAAP measures,” the filing said. “Please revise to remove this adjustment in future filings.”

MicroStrategy began buying bitcoin as part of a capital allocation strategy in 2020, setting it apart from other companies. It has been aggressively buying bitcoin ever since, making its shares a proxy for the cryptocurrency.

As of the end of 2021, MicroStrategy held 124,391 bitcoins, acquired for roughly $3.75 billion at an average price of about $30,159 per bitcoin, CEO Michael Saylor announced on Twitter at the time.

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