Playboy, the iconic brand established by the late Hugh Hefner, recently disclosed a substantial impairment loss of $5 million on its Ethereum investments from the previous year.
The company cited the extended crypto winter as the primary cause of this loss, which had a notable effect on the overall market and led to a downturn in cryptocurrency prices.
At the height of the crypto boom in October 2021, Playboy rolled out its Rabbitar NFT venture. However, according to some reports, the native coin of Ethereum, Ether, has experienced a sharp drop of more than 60% in value since then.
In its annual report released on Thursday, the media giant revealed that it had accepted Ethereum as payment for its Rabbitars NFTs, which were launched in 2021 and are now being held on its balance sheet as digital assets.
Losses that Playboy Did Not See Comming
The company stated that the market value of one Ethereum in its primary market ranged from $964 up to $3,813 on December 31, 2022.
However, the carrying value of each Ethereum held by Playboy at the end of the reporting period reflects the lowest price of one Ethereum quoted on the active exchange at any time since its receipt.
Playboy considers its digital assets as indefinite-lived intangible assets and is subject to impairment losses if the assets’ fair value drops below their carrying value at any time.
Despite an increase in the fair value of digital assets after an impairment loss has been recorded, it is impossible for a company to recover the loss. In other words, the loss is considered irreversible, even if the asset’s market value exceeds its carrying value following the impairment.
Dipping its Feet in the Crypto Sphere
In March 2021, Playboy made headlines by announcing its interest in NFTs, becoming one of the first major companies in the adult entertainment industry to explore the possibilities of blockchain technology.
This move was seen as a strategic effort to stay relevant and connect with a new generation of fans, while also exploring innovative revenue streams in the digital age.
In addition to Rabbitars, Playboy has leveraged NFTs to showcase some of its most iconic magazine covers, including the inaugural 1953 issue of Playboy and the famous 1971 cover featuring actor Burt Reynolds.
These NFTs were made available for purchase through several NFT marketplaces, like Rarible and Open Sea.
Playboy has taken its NFT ambitions to the next level by launching its very own NFT marketplace, providing a secure and transparent blockchain-based platform for artists to showcase and sell their digital artwork as NFTs.
This move demonstrates the company’s commitment to empowering artists by providing them with a unique opportunity to monetize their work in the digital realm, while also providing collectors with an easy way to access cutting-edge digital art.
Expanding Its NFT Presence Across the Globe
Playboy has expanded its NFT presence by collaborating with various brands and artists, resulting in unique NFT drops.
One notable example is their partnership with the popular streetwear brand, Supreme, which featured a limited edition NFT drop showcasing artwork by Takashi Murakami.
Besides these projects, Playboy has demonstrated a keen interest in exploring other cutting-edge Web3 technologies, including decentralized finance, along with metaverse development.
With this forward-thinking approach, Playboy is positioning itself as a leader in the adult entertainment industry by embracing the latest digital innovations and creating new opportunities for growth and engagement.
Will Playboy Pull Out of the Crypto World?
After Playboy faced heavy losses on Ethereum, many people have wondered whether playboy will stick with the crypto world or not. So far, there has been no indication suggesting that the entertainment company will part ways with crypto.
Like Playboy, many other companies have faced gigantic losses in crypto, but have been able to recover quite smoothly, which suggests that Playboy may continue its crypto ventures down the line.