Learn Concept: How FASB Adjustments Impact Crypto Asset Valuation

By: Eliza Bennet

Understanding Crypto Asset Valuation and the role of FASB Adjustments

The financial accounting world’s interaction with cryptocurrencies shaped the recent impact on big technology firms such as MicroStrategy, who heavily invested in Bitcoin. Interestingly, the firm decided against adjusting to the new FASB (Financial Accounting Standards Board) standards, leading to a significant decrease in MicroStrategy - the business intelligence firm that holds 1% of the entire Bitcoin supply - share price by a staggering 15%.

Consequently, this decision led to a $191 million asset impairment charge on MSTR. However, the firm’s aggressive commitment to Bitcoin remains unwavering and even purchased an additional $1.65 billion worth of Bitcoin. This brought their aggregate holdings to an impressive 214,400 BTC by the first quarter of 2024.

Notable is the share price's reaction, steadily declining and hovering near $1100. The primary attributing factor is the lack of FASB adjustments leading to an approximate $11 per share impact on the bottom-line. Positively, the value of MicroStrategy’s Bitcoin assets would be significantly boosted if Bitcoin was to reach the values of $100,000 or $250,000 per coin. The U.S.economic data's recent optimism for digital currencies remains despite forecasting more hawkish forward guidance from the Federal Reserve.