Playboy suffered a $4.9 million loss on Ethereum it held last year

Updated: 06 June 2024

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The last year has been very difficult on the crypto industry, which suffered tremendous losses as a consequence of the bear market. The crypto industry is already familiar with the collapses of the Terra blockchain, FTX, Three Arrows Capital, and other companies. However, it is worth noting that non-crypto firms that opened their doors to digital assets have suffered, as well.

One recent report came from PLBY Group, the parent company of Playboy. The Group said that it lost $4.9 million on ETH that it accepted as payments for its NFT collection last year. The loss was caused by the drop of Ethereum’s price during the last year’s crypto winter.

NEW: Playboy Lost $4.9M on #Ethereum It Accepted as NFT Payments 👯

— Altcoin Daily (@AltcoinDailyio) March 17, 2023

The collection in question was named Rabbitars, and it was originally launched in 2021. Playboy decided to keep the ETH, which it added to its balance sheet as digital assets. However, after a full year of price drops, the value of its digital assets has declined significantly. According to Playboy’s annual filing, published this Thursday, the value of digital assets was down to $327,000 as of last year.

Meanwhile, the previous filing shows that the assets’ worth in September 2022 was at $1.75 million. The company addressed the figures, explaining that it accounts for its digital assets as “indefinite-lived intangible assets.” As such, they are subject to impairment losses in the scenario where the assets’ fair value falls below their carrying value.

Playboy lost a fortune as Ethereum dropped

Unfortunately, the impairment losses taken on digital assets cannot be recovered. This is true even if the assets’ fair value rises after taking the impairment loss. Playboy’s filing explained the situation saying that

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

The company had high hopes for its NFT collection, which launched in October 2021, as the crypto market was at the peak of the year-long bull run. The drops started only a month later, around November 11th, causing severe losses that remained consistent throughout 2022. Since October 2021, Ether price dropped by about 60%. By October 2022, the price was down to $1,352, and at the time when the collection was sold, it was well above $4,000.

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