Strategy estimated a $4.1 billion income-tax benefit after the fair value of its Bitcoin holdings rose above their cost basis as of Sept. 30, according to an Oct. 5 filing. The benefit comes from releasing a valuation allowance tied to a deferred tax asset, which lowers the company's estimated tax expense. Management prepared the figures, and they haven't been audited or reviewed by KPMG.
What actually changed on the balance sheet
Under fair-value accounting, a company marks its Bitcoin to market. When the price sits below the purchase cost, it carries a deferred tax asset that it may not be able to use — hence the valuation allowance. Once the price recovers above cost, that allowance can be released, and the deferred tax asset shows up as a benefit rather than a charge. That's the mechanical switch Strategy says it flipped.
Strategy disclosed 848,000 BTC at an average purchase price of $75,440.70, including fees and expenses, as of 4 p.m. Eastern time on Oct. 4.
The ETF math isn't the same as Strategy's
BlackRock's iShares Bitcoin Trust doesn't report the same way. Maketo estimated the average cost of the Bitcoin remaining in IBIT at $81,188 per BTC as of Oct. 2. BlackRock's Oct. 5 holdings file listed about 806,038 BTC, and the fund page reported nearly $69 billion in net assets with a Bitcoin benchmark level of $85,694.41 that day.
IBIT's June 30 quarterly filing tells a different story from that later snapshot. It recorded 734,261 BTC with an investment cost of about $61 billion and a fair value of about $43.4 billion — meaning the same holdings sat below cost at that cutoff. During the six months ended June 30, the Trust acquired 157,501 BTC and disposed of 192,970 BTC for share redemptions, including in-kind transfers.
Redemptions aren't the same as selling shares
An investor can sell ETF shares in the secondary market, but redeeming directly with IBIT is a separate transaction — only authorized participants can create or redeem baskets with the Trust. The prospectus draws a line between cash redemptions and redemptions in Bitcoin: a cash redemption means the Trust converts underlying Bitcoin into cash, while an in-kind redemption delivers Bitcoin. That distinction matters for anyone trying to read the fund's Bitcoin sales as a directional bet.
Flows were mixed on Oct. 5
US spot Bitcoin ETFs recorded net outflows of $89.8 million on Oct. 5, according to the filing data. Farside Investors' data show BlackRock's fund recorded inflows in that same session — so the outflow figure was a market-wide number, not an IBIT-specific one. The timing isn't great for the broader complex, but BlackRock's slice of it held up.
Strategy's filing is a management estimate, not an audited result. KPMG's review, or its absence, is the next concrete checkpoint investors can look for.
