Bitcoin Fair Value Accounting: Why Strategy Reports Billion-Dollar Profits

Bitcoin Fair Value Accounting: Why Strategy Reports Billion-Dollar Profits

Bitcoin fair value accounting is the reason Strategy reported net income of 19.5 billion dollars for the third quarter of 2026 on revenue of 125.4 million.

Let's look at how this accounting works, why this profit is on paper and how to separate it from the results of the business itself.

What bitcoin fair value means in financial reporting

Fair value is the market price of an asset on the reporting date. For bitcoin, it is taken from the principal active market where the company could sell its coins.

Since 2025, US companies have carried crypto at market price. This is required by the FASB standard ASU 2023-08: the change in value over the period goes straight into the income statement.

If bitcoin rose during the quarter, the company reports a remeasurement gain. If it fell, it reports a loss, even if it did not sell a single coin.

How bitcoin was accounted for before 2025

Previously, bitcoin was accounted for as an intangible asset at cost less impairment. The value could only be written down.

Price gains did not show up in the report until the coins were sold. Because of this, bitcoin holders' balance sheets lagged well behind the market, and quarterly results looked worse than the real picture.

Why remeasurement gains are called paper profits

A remeasurement gain does not bring a single dollar into the company's account. The coins stay on the balance sheet, they are simply worth more.

To turn it into cash, the coins have to be sold. Until that happens, the result depends on the price on the last day of the quarter.

In our view, the key issue here is volatility. A quarter of growth produces billions in profit, a quarter of decline can produce the same billions in losses, even though the company's business has barely changed over that time.

How to read a bitcoin treasury company's report

In the report of a company that holds bitcoin in reserve, it helps to separate the result into two parts.

• revenue and expenses of the core business: software, services, mining or another line
• gains or losses from remeasuring digital assets
• tax effects related to the remeasurement
• the number of coins on the balance sheet and the average purchase price
• coin purchases and sales during the period
• debt, preferred shares and cash reserves

Strategy has operating income of 20.9 billion dollars on revenue of 125.4 million. This means the remeasurement also passed through the operating line, and on its own that line says nothing about the software business.

We believe the fairest approach is to compare the revenue and expenses of the core business separately and to look at the remeasurement alongside the bitcoin price for the same quarter.

A hypothetical example: how remeasurement changes profit

A hypothetical example. A company holds 10,000 BTC and does not buy more. Its core business brings in 25 million dollars of revenue per quarter and costs 27 million in expenses.

The company's business consistently loses 2 million every quarter. Yet the period total jumps from plus 78 million to minus 62 million purely because of the price.

The numbers are hypothetical and exclude taxes. They show the mechanics, not a real company.

What this means for traders and arbitrage traders

From what we see, loud headlines about treasury company profits often coincide with a bitcoin rally that has already happened. The report itself carries almost no new information about the price.

On the other hand, attention to bitcoin rises on the day of the release, and prices across exchanges can diverge for a while. An arbitrage scanner shows such gaps across dozens of exchanges together with the available volume.

Before entering a trade, factor in fees, network charges and slippage. Without them, the spread on the screen may turn out smaller than it looks.

Our tools

Treasury company reports draw attention to bitcoin, while prices on different venues react differently, so it helps to keep every exchange in view at once. Our arbitrage screener keeps dozens of venues in one window, refreshes quotes every second and shows each gap together with the volume actually behind it. The spread calculator helps you check what survives fees, network costs and slippage at your size. The bot is fully manual. It never connects to your exchange API keys.

To test the tools on a live market, ArbitrageScanner offers one day of free access to the whole ecosystem.

FAQ (Frequently Asked Questions)

1. What is bitcoin fair value?

It is the market price of bitcoin on the reporting date, taken from the principal active market. Companies carry their coins on the balance sheet at this price.

2. Since when have companies carried crypto at market price?

Since 2025, US companies have applied the FASB standard ASU 2023-08 and carry crypto at fair value.

3. Why does Strategy report billion-dollar profits?

Most of the profit is the remeasurement of bitcoin on its balance sheet. For the third quarter of 2026, net income was 19.5 billion dollars on revenue of 125.4 million.

4. Can a bitcoin remeasurement gain turn into a loss?

Yes. If the price at the end of the next quarter is lower, the company will report a remeasurement loss without selling a single coin.

5. How to tell remeasurement gains from the operating business?

Look at the revenue and expenses of the core business separately, and at the digital asset remeasurement line separately, alongside the bitcoin price for the same period.

Conclusion

Fair value accounting forces companies to show every move in the bitcoin price in their profit. That is where Strategy's billion-dollar results on revenue in the hundreds of millions come from.

Such profit is on paper and can reverse next quarter. When reading a treasury company report, separate the remeasurement from the core business, and for trading, look at real prices and costs, not headlines.

IMPORTANT! We are software developers. We do not give recommendations or promises of earnings and we do not advise you to invest your money anywhere. Our software is fully manual, all your money stays under your own control. We show examples of how our clients have earned on arbitrage in the past, but we do not advise repeating those actions one to one. Your earnings depend solely on your own actions and on market factors.