Playboy’s Ether Losses Take Toll Amid Cryptocurrency Volatility

PLBY Group, the parent company of Playboy Enterprises, has taken a significant loss on its Ethereum holdings due to a sharp decline in cryptocurrency prices last year. The lifestyle and media firm said in its annual filing on Thursday that it incurred an impairment loss of $4.9 million on the ETH it held in 2022. The value of the digital assets currently sits at $327,000 as of last year, according to the filing. A previous filing showed the company’s digital assets were worth $1.75 million as of Sept. 30, 2022.

Ether Losses Due to Crypto Winter

The company, which accounted for its digital assets as “indefinite-lived intangible assets,” said that these assets are subject to impairment losses if the fair value of the assets falls below their carrying value. Even if the fair value of the assets rises after taking the impairment losses, the losses can’t be recovered. According to the filing, “negative swings in the market price of Ethereum could have a material impact on the company’s earnings and carrying value.” The filing also noted that the company accepted ether as payments for its “Rabbitars” non-fungible tokens (NFT) launched in 2021.

Rabbitars and Previous Forays into Digital Assets

Playboy entered into the NFT and blockchain technology industry with its NFT drop called “Liquid Summer” in collaboration with artist Slimesunday. The collection features archival photographs of Playboy model Lenna Sjööblom, the so-called “First Lady of the Internet.” The company launched its “Rabbitar” NFT project in October 2021, which resulted in the ETH losses. In 2018, Playboy TV began accepting bitcoin payments, which expanded to Playboy.com in June 2021.

Implications of Cryptocurrency Volatility

The impairment losses that PLBY Group incurred on its ETH holdings show the risks associated with holding digital assets amid volatility in the cryptocurrency markets. While the NFT market has exploded in recent years, the broader market prices for digital assets can fluctuate dramatically, leading to significant losses. Playboy’s experience highlights the challenges companies face in accounting for digital assets as indefinite-lived intangible assets, which can result in impairment losses that cannot be recovered. As cryptocurrencies continue to gain prominence in the mainstream, the implications of their volatility on the wider economy and businesses become increasingly significant.

Source: CoinDesk