Bitcoin Rally Brings Strategy a $4.1 Billion Tax Boost

Strategy, a Bitcoin holder, reported a substantial tax benefit of $4.1 billion following a rally in Bitcoin's price. According to an Oct. 5 filing, the company's tax advantage stemmed from an accounting adjustment where Bitcoin's fair value surpassed its cost as of Sept. 30. This adjustment involved reversing a deferred tax asset and releasing the associated valuation allowance, though these figures were not audited or reviewed by KPMG.

The filing highlights how Bitcoin's price movements can significantly impact large holders' tax positions. Strategy disclosed owning 848,000 BTC with an average purchase price of $75,440.70 as of Oct. 4. The company's tax benefit is tied to its own tax accounts and a September valuation-allowance adjustment.

Meanwhile, BlackRock's iShares Bitcoin Trust ETF (IBIT) reported holding about 806,038 BTC as of Oct. 5, with nearly $69 billion in net assets. The fund's estimated acquisition cost for Bitcoin was $81,188 per BTC as of Oct. 2. However, shareholder break-even prices can vary based on when they entered the market, as each investor's cost basis differs.

IBIT's June 30 filing recorded 734,261 BTC with an investment cost of about $61 billion and a fair value of about $43.4 billion, indicating that the same holdings were below cost at that time. The fund's realized gains and losses are calculated using the average cost method, with significant activity in both acquisitions and disposals during the first half of the year.