New FASB rules impacted Marathon Digital with $148M fair value adjustment loss in Q2.
Bitcoin miners could achieve GAAP accounting net profits this quarter if Bitcoin's price holds above $62,000 by the end of the month. The Financial Accounting Standards Board requires miners to mark their Bitcoin holdings to market as of June 30, 2024, for Q2 earnings reports.
The FASB introduced new accounting rules effective for fiscal years beginning after Dec. 15, 2024, requiring companies to measure certain digital assets like Bitcoin at fair value. This change meant that entities must report the value of their Bitcoin holdings based on current market prices in each reporting period, with any changes recognized in net income.
The rules aim to provide more accurate and relevant financial information, align digital assets' accounting treatment with other financial assets, and potentially encourage broader corporate adoption of cryptocurrencies by enhancing transparency and investor confidence.
Analyst Cryptoklepto emphasized that holding above current prices is crucial for HODL miners like Marathon Digital Holdings (MARA,) which marked the price at the end of Q2 at $62,668. "Breakthrough and flip $62,700 to serve as Bitcoin support and the entire story for Q3 changes for $MARA," he noted.
Interestingly, the CF Benchmarks BRRNY, used by spot Bitcoin ETFs like BlackRock and Fidelity, closed at $61,900 on June 30, some $800 lower than the price used by Marathon.
Marathon reported revenues of $145.1 million in Q2 2024, a 78% increase from $81.8 million in Q2 2023. Despite this growth, the company posted a net loss of $199.7 million, partly due to unfavorable fair value adjustments of $148.0 million resulting from new FASB accounting rules, as detailed in their financial report.
The company's hash rate increased to 31.5 EH/s, and combined cash and Bitcoin holdings rose to $1.4 billion on June 30, 2024. The potential for positive earnings per share hinges on Bitcoin's price holding above the critical threshold, as industry observers have noted.
Market participants closely monitor Bitcoin's price movements, as holding above the $62,700 mark could significantly alter financial outcomes for major mining firms in upcoming earnings reports.
Further, questions arise around institutional abilities to influence Bitcoin's price around the end of each reporting sector to ensure net profitability. Bitcoin rose from $57,600 on Sept. 17 to over $63,000 as of press time on Sept. 19 as the quarter ends in 7 US market trading days.