Crypto
Home›Crypto›Market Structure›Crypto earnings can misstate losses when realized vs u…
Crypto earnings can misstate losses when realized vs unrealized diverge
Strategy Inc. expected an $8.32 billion digital asset loss in its quarter, but later coverage treated the entire amount as unrealized after realized figures were affected by reporting conventions.
CoinDesk examines how quarterly crypto earnings reporting can be misleading for financial advisors, particularly when readers compare “realized” results from income statements to what is actually reflected in a company’s balance sheet. In a case study, CoinDesk describes how Strategy Inc., the largest corporate holder of bitcoin, pre-announced its second-quarter results in a July 6 filing with a projected $8.32 billion loss on digital assets, consisting of $8.31 billion unrealized and $900,000 realized. When results arrived on July 30, the company’s press release characterized the full $8.32 billion as an unrealized loss, with the earlier realized figure effectively disappearing due to rounding conventions between filings.
The newsletter also points to actual activity during the quarter: Strategy sold 1,363 bitcoin on June 29 and 30 for $80.8 million, or an average of $59,256 per coin. Using the $75,578 blended purchase price disclosed as of June 30, CoinDesk estimates those coins would have cost about $103 million to acquire, creating a larger gap on disposal economics than the $900,000 realized loss shown for the quarter.
CoinDesk attributes the disconnect to accounting and measurement rules. It notes that ASU 2023-08 requires in-scope crypto assets to be carried at fair value with remeasurement through net income, so the “difference between the last mark and the proceeds” can be small or even zero, reflecting movement since the previous measurement rather than the full disposal economics based on cost basis.
Latest closeBitcoin $81,004.44 ▲4.8%