CryptoSlate
Strategy estimated a $4.1 billion income-tax benefit after Bitcoin’s fair value rose above the company’s cost as of Sept. 30, according to an Oct. 5 filing. The estimate reflects a lower tax expense from an accounting adjustment: Strategy reversed a deferred tax asset related to its Bitcoin and released the associated valuation allowance. The management-prepared figures had not been audited or reviewed by KPMG.
The filing reported 848,000 BTC held at an average purchase price of $75,440.70, including fees and expenses, as of Oct. 4 at 4 p.m. Eastern time. That holdings figure has a later cutoff than the Sept. 30 comparison behind the tax estimate.
Why it matters
The benefit applies to Strategy’s own tax accounts, not to Bitcoin ETF investors. A company’s holdings, an ETF’s underlying Bitcoin and an investor’s ETF shares each have separate purchase histories and cost comparisons. An ETF’s estimated acquisition cost therefore cannot establish an individual shareholder’s break-even price.
Maketo estimated the average cost of Bitcoin remaining in BlackRock’s iShares Bitcoin Trust, IBIT, at $81,188 per BTC as of Oct. 2. BlackRock’s Oct. 5 holdings file listed about 806,038 BTC. Its fund page reported nearly $69 billion in net assets and a Bitcoin benchmark level of $85,694.41 that day.
Market impact
US spot Bitcoin ETFs recorded $89.8 million in net outflows on Oct. 5, while IBIT took in funds during the same session. The split shows that fund flows can diverge even as Bitcoin trades at a shared market price.
IBIT’s June 30 filing recorded 734,261 BTC, with an investment cost of about $61 billion and fair value of about $43.4 billion. In the six months through June 30, the Trust acquired 157,501 BTC and disposed of 192,970 BTC for share redemptions, including in-kind transfers. Those totals do not establish when transactions occurred relative to cost crossings or why investors acted. Cash redemptions and in-kind Bitcoin transfers also work differently, and only authorized participants can redeem directly with the Trust.
Frequently asked questions
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What produced Strategy’s estimated $4.1 billion tax benefit?
Strategy said Bitcoin’s fair value exceeded its cost as of Sept. 30. It reversed a deferred tax asset related to Bitcoin and released the associated valuation allowance, lowering estimated tax expense.
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How many Bitcoin did Strategy report holding, and when was that figure measured?
Strategy reported 848,000 BTC at an average purchase price of $75,440.70, including fees and expenses, as of Oct. 4 at 4 p.m. Eastern time.
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Does IBIT’s estimated Bitcoin cost determine an investor’s break-even price?
No. IBIT’s estimated acquisition cost measures the fund’s underlying Bitcoin. Shareholders buy ETF shares at market prices, so their break-even points depend on when and at what price they bought.
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How did US spot Bitcoin ETF flows compare with IBIT’s flows on Oct. 5?
US spot Bitcoin ETFs recorded $89.8 million in net outflows, while BlackRock’s IBIT recorded inflows during the same session.
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Who can redeem IBIT baskets, and what forms can redemptions take?
Only authorized participants can create or redeem baskets directly with the Trust. Redemptions may be in cash, which requires the Trust to convert Bitcoin, or in kind, by delivering Bitcoin.
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