Cryptocurrency Investment Ended in a $4.9 Million Deficit for Playboy Due to Ethereum Bid
Playboy's Digital Misfortune: A Crypto Loss worth $4.9 Million
The parent company of iconic brand Playboy, PLBY Group, suffered a significant setback of $4.9 million due to the tumultuous crypto market. The company had sold its Rabbitars NFTs for Ethereum, which has seen a dramatic drop in value.
Playboy entered the NFT scene in 2021, accepting Ethereum as a payment method for its digital tokens. Unfortunately, the price of Ethereum coins plummeted, causing a hefty financial hit for the media company.
As per reports, Playboy's digital assets, valued at $1.75 million at the end of September 2022, have now dwindled to $327,000. The ongoing "crypto winter" has left a lasting impact on the company's crypto portfolio.
The downside for Playboy is that their digital assets are classified as "indefinite-lived intangible assets." These assets are vulnerable to impairment losses, which cannot be recouped even if the crypto market rebounds.
It's worth noting that the price of Ethereum coins saw substantial fluctuations in 2022. Periods of turbulence resulted in price swings, with the coins hitting a low of $964. The carrying value of each token held by the group at the end of the reporting period reflects this lowest price since their acquisition.
In essence, ongoing market fluctuations in Ethereum could have a material impact on the company's earnings, while only a recovery and subsequent sale of the Ethereum on the balance sheet at a gain can positively impact their earnings.
Playboy's Blockchain Dream on Ice
Playboy's foray into the world of NFTs began with the launch of Rabbitar in October 2021, a time when cryptocurrencies were still generating a lot of buzz. The company was intrigued by potential new revenue streams.
Interestingly, Playboy's Rabbitar wasn't its first blockchain venture. The company had already launched the Liquid Summer collection earlier that year, in collaboration with artist Slimesunday. The collection featured photographs of Lenna Sjööblom, a renowned Playboy model.
Playboy had shown interest in the crypto world long before minting the Liquid Summer collection. In 2018, customers were able to subscribe to Playboy TV using Bitcoin. eventually, Bitcoin payments were accepted on Playboy.com as well.
Despite Playboy's genuine interest in the crypto space, the company is currently reeling from substantial losses.
- The decline in the value of Ethereum, a cryptocurrency, has caused Playboy's digital assets, initially valued at $1.75 million in September 2022, to dwindle to $327,000.
- Playboy Group, the parent company of the iconic brand, suffered a significant setback of $4.9 million due to the tumultuous crypto market, primarily from the sale of Rabbitars NFTs for Ethereum.
- Despite entering the NFT scene in 2021 and accepting Ethereum as a payment method for digital tokens, Playboy's misfortune in the crypto market serves as a testament to the risks inherent in investing in cryptocurrencies and NFTs.
- The ongoing "crypto winter" has left a lasting impact on Playboy's crypto portfolio, and their digital assets being classified as "indefinite-lived intangible assets" means that impairment losses cannot be recouped even if the crypto market rebounds.
