Strategy books $4.1bn tax benefit as Bitcoin tops its cost basis
Strategy estimated a $4.1 billion income-tax benefit after Bitcoin's fair value rose above its cost as of September 30, according to its October 5 filing. The company said it reversed a deferred tax asset related to its Bitcoin and released the associated valuation allowance, producing a lower estimated tax expense through an accounting adjustment. Strategy noted that the management-prepared figures had neither been audited nor reviewed by KPMG.
The disclosure illustrates what can change when Bitcoin crosses a large holder's cost basis, and what does not. Strategy disclosed 848,000 BTC at an average purchase price of $75,440.70, including fees and expenses, as of October 4 at 4 p.m. Eastern time, a later cutoff than the September 30 accounting comparison. A company's Bitcoin holdings, an ETF's underlying assets and an investor's ETF shares each carry their own purchase history, so a shared price level says little on its own about any one position.
Maketo estimated the average cost of Bitcoin remaining in BlackRock's iShares Bitcoin Trust ETF (IBIT) at $81,188 per BTC as of October 2, reconstructing underlying Bitcoin costs from daily money flows and prices. BlackRock's October 5 holdings file listed about 806,038 BTC, and its fund page reported nearly $69 billion in net assets and a Bitcoin benchmark level of $85,694.41 that day. Its June 30 quarterly filing recorded 734,261 BTC with an investment cost of about $61 billion against a fair value of about $43.4 billion — the same holdings below cost at that earlier cutoff. IBIT calculates realised gains and losses on Bitcoin disposals using average cost, and the June filing shows substantial activity in both directions: over the six months to June 30, the Trust acquired 157,501 BTC and disposed of 192,970 BTC for share redemptions, with those categories including in-kind transfers.
Flows on October 5 were mixed. US spot Bitcoin ETFs recorded net outflows of $89.8 million, while Farside Investors' data show BlackRock's fund recorded inflows in the same session, according to the source. Only authorised participants can create or redeem baskets directly with IBIT, and the prospectus distinguishes cash redemptions, where the Trust converts underlying Bitcoin into cash, from in-kind redemptions, which deliver Bitcoin. Actual creations, redemptions and the handling of redeemed Bitcoin are the next signals to watch.
