Playboy Loses Nearly $5 Million on Ethereum ($ETH) Accepted for NFT Collection

The parent company of Playboy, PLBY Group, has reported an impairment loss of $4.9 million on the Ethereum ($ETH) it held last year, which was received after it accepted the cryptocurrency as a payment method for a non-fungible token (NFT) collection.

Back in 2021, PLBY Group accepted Ethereum as payment for its “Rabbitars” NFT collection, and has seen been holding onto the cryptocurrency on its balance sheet. The value of the digital assets sits at $327,000 as of last year, a significant drop that was caused by a wider crypto market crash. In a filing, the company wrote:

The market price of one Ethereum in our principal market ranged from $964 – $3,813 during the year ended December 31, 2022, but the carrying value of each Ethereum we held at the end of the reporting period reflects the lowest price of one Ethereum quoted on the active exchange at any time since its receipt.

The company accounts for its digital assets as “indefinite-lived intangible assets,” which are subject to impairment losses if the fair value of the assets falls below their carrying value at any time.

Negative swings in the market price of Ethereum could have a material impact on the company’s earnings and carrying value, while only a rise in prices will impact the company’s earnings positively when the Ethereum held on the balance sheet is sold at a gain.

While the “Rabbitar” NFT project was launched in October 2021, during the height of the cryptocurrency market, the company entered the NFT and blockchain space earlier in 2021 through its NFT drop called “Liquid Summer,” which is a collection of digital artworks created in collaboration with the artist Slimesunday.

Ethereum has, nevertheless, bullish catalysts. As CryptoGlobe reported, the supply of Ethereum has dropped by over 64,457 ETH since the network’s merge upgrade over 180 days, to the point there are now 120,456 ETH circulating on the market. Ethereum’s supply has been dropping by 0.1% per year since the Merge, while without it, it would be rising at a rate of 3.42% per year.

The cryptocurrency is set to undergo its highly-anticipated Shanghai-Capella upgrade, often referred to as Shapella, upgrade on April 12. The upgrade includes one key feature, with Ethereum Improvement Proposal (EIP) 4895.

EIP 4895 will allow for withdrawals of staked Ether on the network, a functionality that wasn’t implemented when the network merged with the Beacon Chain and transitioned to a Proof-of-Stake consensus.

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