U.S. GAAP accounting converts corporate crypto volatility into permanent earnings losses

Reported earnings per share for MicroStrategy and Bitmine are reduced by the accounting treatment of their digital asset treasuries. MicroStrategy carries an unrealized loss of $3.61 billion on its 780,897 BTC. Bitmine faces an unrealized loss of $7 billion on its 4,874,858 ETH. These losses occurred as Bitcoin and Ethereum market prices fell below the aggregate purchase prices paid by the firms. Under U.S. GAAP, cryptocurrencies are classified as indefinite-lived intangible assets. This classification requires assets to be written down if market value falls below cost. These impairment losses are reported on income statements. Once recorded, these losses cannot be reversed even if the market price of the asset recovers. The write-downs reduce reported earnings per share.