SharpLink stays course on $2.6b ETH strategy despite $87m non-cash loss

SharpLink’s Q2 results show an $87.8 million non-cash impairment on LsETH, but the company remains fully committed to its multibillion-dollar ETH treasury strategy. With 728,804 ETH locked in and compounding, SharpLink appears to play a longer game than quarterly reports suggest.

On August 15, SharpLink Gaming, Inc. (NASDAQ: SBET) announced its its Q2 2025 earnings, revealing an $87.8 million non-cash impairment tied to its liquid staked ETH (LsETH) holdings. This paper loss was mandated by U.S. GAAP accounting rules rather than reflecting an actual divestment.

The Minneapolis-based iGaming giant, which has rapidly positioned itself as one of the largest corporate holders of Ethereum, reported no sales of its staked Ethereum ( ETH) and instead emphasized its continued accumulation strategy, now holding 728,804 ETH worth approximately $2.6 billion.

Backed by Ethereum co-founder Joseph Lubin as chairman and ex-BlackRock digital asset strategist Joseph Chalom as co-CEO, SharpLink has staked nearly all of its ETH, generating over 1,300 ETH in rewards since inception.

The GAAP paradox and SharpLink’s unshaken Ethereum bet

SharpLink determined the $87.8 million impairment on its LsETH holdings using standard U.S. GAAP accounting rules. The company compared the carrying value of each LsETH unit to the lowest price quoted on an active exchange since acquisition.

When the carrying value exceeded this minimum, a non-cash impairment was recorded, reducing the carrying value of LsETH to $382.4 million as of June 30, 2025. Crucially, SharpLink did not sell or redeem any ETH, meaning the adjustment reflects a technicality rather than an economic setback.

The impairment highlights the volatility inherent in digital asset accounting but has not deterred SharpLink from doubling down on Ethereum.

Why Ethereum? Institutional-grade conviction

SharpLink said its ETH treasury strategy hinges on Ethereum’s role as the backbone of decentralized finance, a thesis underscored by its high-profile hires and partnerships.

“SharpLink’s treasury strategy is based on a single conviction: ETH will serve as the core trust commodity of the next-generation financial system being built on Ethereum,” the company wrote. “Every step of this strategy strengthens the Ethereum network and creates enduring long-term value, aligning stockholder growth with the growth of the ecosystem itself.”

This alignment is measurable. SharpLink’s ETH Concentration metric, a proprietary gauge of accumulation efficiency, jumped 98% from 2.00 to 3.95 in weeks, reflecting aggressive buying and staking. The company has deployed over $2.6 billion raised through PIPEs and direct offerings to amass its massive ETH holdings, nearly all of which is staked and yielding rewards.

Financial realities beyond the impairment noise

Financially, SharpLink reported $0.7 million in revenue and $0.2 million in gross profit for Q2 2025, compared with $1.0 million and $0.3 million, respectively, in the prior-year quarter.

Operating expenses rose to $2.3 million, including $16.4 million in non-cash stock-based compensation linked to the strategic advisory agreement with Consensys, alongside other ETH-related unrealized gains and losses.

According to the press release, the net loss for the quarter came to $103.4 million, driven largely by the non-cash impairment and stock-based compensation. Yet the company emphasizes that its long-term ETH accumulation and staking strategy remains intact.