Bitcoin Accounting Under IFRS: IAS 2, IAS 38 and Impairment

Bitcoin accounting under IFRS diverges early. Two entities buy the same quantity of bitcoin (BTC) on the same morning, at the same price. One will carry it at cost less impairment; the other at fair value less costs to sell, with every price movement in profit or loss. Both can be right, and nothing on the blockchain distinguishes them.

That is Bitcoin accounting under IFRS. No IFRS Standard called Cryptocurrencies exists; the framework classifies instead, and classification turns on what the entity does with the coins. Get that wrong and measurement, impairment, presentation, derecognition and deferred tax follow it down.

The holder model in Bitcoin accounting under IFRS is settled. The IFRS Interpretations Committee concluded in its June 2019 agenda decision that a qualifying cryptocurrency holding falls under IAS 2 Inventories when held for sale in the ordinary course of business, and otherwise under IAS 38 Intangible Assets. The difficulty starts when real transactions arrive on top, and when the presentation standard itself changes in 2027.

Scope. Native BTC held by an entity reporting under IFRS Accounting Standards, directly or through arrangements that may preserve beneficial ownership. Wrapped BTC, Bitcoin exchange-traded funds, derivatives and tokenised claims are different assets.

Reading rule. Published requirements carry their standard and, where verified, a paragraph reference. Applications to mining, custody and lending facts are analysis: no IFRS Standard addresses native BTC directly. Firm material is interpretation, not IFRS.

Bitcoin accounting under IFRS starts with IAS 2 vs IAS 38

The Committee considered cryptocurrencies recorded on a distributed ledger, not issued by a jurisdiction or another party, giving rise to no contract between holder and anyone else. Native BTC fits: no issuer, no counterparty, no redemption promise. Two negative conclusions in the agenda decision do most of the work. Such a cryptocurrency is not cash: it is not used as a medium of exchange and as the monetary unit in pricing goods or services to the extent that it would be the basis on which all transactions are measured, the description of cash implied by IAS 32.AG3. It is not a financial asset: it gives the holder no contractual right and is not an equity instrument of another entity. It does meet the IAS 38.8 definition of an intangible asset: identifiable, non-monetary, without physical substance. Routing between the two remaining classifications is a factual test, not a choice.

IAS 2 when Bitcoin is held for sale in the ordinary course

IAS 2 applies when BTC is held for sale in the ordinary course of business, a test of the purpose of the holding and the entity's ordinary activities, not of whether a treasury position is occasionally sold. Inventory is measured at the lower of cost and net realisable value (IAS 2.9) and expensed in the period the related revenue is recognised (IAS 2.34).

IAS 2 also carries a separate exception the Committee expressly pointed to: inventories principally acquired with the purpose of selling in the near future and generating a profit from fluctuations in price or a broker-trader's margin may be measured at fair value less costs to sell, with changes in profit or loss (IAS 2.3(b) and 2.5). Two qualifications go missing in summaries. It is narrow (IAS 2.5 defines broker-traders as those who buy or sell commodities for others or on their own account, so mining or frequent trading does not establish that status) and it excepts IAS 2's measurement requirements only: everything else applies, including the IAS 2.36-39 disclosures the agenda decision directs an inventory holder to make.

IAS 38 for the typical treasury or investment holding

When IAS 2 does not apply, the agenda decision points to IAS 38. An indefinite useful life is often supportable for native BTC, because on an analysis of all relevant factors there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity (IAS 38.88). Indefinite means no foreseeable limit: not permanent, and not settled. It also means no amortisation (IAS 38.107), not no work. The asset is tested for impairment by comparing recoverable amount with carrying amount annually and whenever there is an indication of impairment (IAS 38.108); the indefinite-life assessment is itself reviewed each period to confirm that events and circumstances still support it (IAS 38.109); and the IAS 38.118-128 disclosures apply, again as the agenda decision directs.

cost at initial recognition -> no amortisation -> IAS 36 impairment analysis -> derecognition when the asset leaves

Initial recognition follows the transaction, not the ticker

The 2019 decision classifies a holding once the entity has an asset; it supplies no journal entry for the way BTC arrived. Buy BTC for cash, take it from a customer in settlement, receive it as an owner contribution, be credited a pool reward: the asset may be identical native BTC, but the credit is not.

A separately purchased IAS 38 holding starts at cost, including directly attributable acquisition cost, while IAS 2 determines the cost of BTC acquired as inventory. BTC from a customer is non-cash consideration measured at fair value under IFRS 15.66 before the resulting asset enters IAS 2 or IAS 38. A mining reward needs a contract analysis or, where no Standard applies specifically, policy development under IAS 8.10. The event creates the entry; classification governs only what follows.

Nor does a dollar quotation make BTC foreign currency. Establishing that a cryptocurrency holding is non-monetary, the Committee quoted IAS 21.16: the essential feature of a non-monetary item is the absence of a right to receive, or an obligation to deliver, a fixed or determinable number of units of currency. That falls out of the IAS 38 definition test; the Committee did not separately analyse foreign-currency status. The effect is still clear. BTC transactions are measured in the functional currency under the standard governing the transaction, not translated as foreign currency because market data is quoted BTC/USD. The point bites when a system built for bank accounts maps every ticker with an exchange rate into a foreign-exchange subledger.

Impairment under the IAS 38 cost model

Under the cost model, BTC is carried at cost less accumulated impairment losses determined under IAS 36. IAS 36.9 requires an assessment at each reporting date of whether there is any indication that an asset may be impaired; for an indefinite-life intangible the annual test applies whether or not an indicator exists. IAS 36.18 compares carrying amount with recoverable amount, the higher of value in use and fair value less costs of disposal.

The step most write-ups skip decides what is being tested. IAS 36.22 sets the default (recoverable amount is determined for an individual asset) but reverses it where the asset does not generate cash inflows largely independent of those from other assets or groups of assets, in which case recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs. A dormant treasury position generates no cash inflows until sold, so asserting that premise loosely argues the entity into a CGU test bundling the coins with an operating business.

Two exits in IAS 36.22 are why individual-asset testing survives for most holdings: it stays at the asset where (a) fair value less costs of disposal exceeds carrying amount, or (b) value in use can be estimated to be close to fair value less costs of disposal and that amount can be measured. For BTC with an observable exit price, route (b) is normally the supportable one, reinforced by IAS 36.21: where there is no reason to believe value in use materially exceeds fair value less costs of disposal, the latter may be used as recoverable amount. Both are conclusions to document on the facts, not permission to substitute daily mark-to-market.

IAS 36 tests an asset, or its CGU, never a netted portfolio. Offsetting an unrealised gain on one BTC lot against an impairment on another fails twice: under the cost model that gain is not recognisable, and netting destroys the per-lot record reversal testing needs.

Can a Bitcoin impairment be reversed?

Yes, and reversal is not optional. That is a real difference from the legacy US GAAP indefinite-lived-intangible model many accountants still carry in their heads.

IAS 36.110 requires an assessment at each reporting date of whether an impairment loss recognised in prior periods for an asset other than goodwill may no longer exist or may have decreased. Where an indication exists, IAS 36.114 requires reversal "if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised." IAS 36.117 caps the increased carrying amount at the amount, net of any amortisation or depreciation, that would have been determined had no impairment been recognised in prior years; IAS 36.119 puts the reversal in profit or loss unless the asset is carried at a revalued amount.

A cost-model position therefore neither follows the market up without limit nor stays frozen at a trough while the price recovers. It moves back toward its no-impairment carrying amount and stops, which is why per-lot impairment history must survive in the cost basis subledger.

The revaluation model and its active-market gate

IAS 38.75 permits an intangible asset to be carried at a revalued amount only where fair value is measured by reference to an active market. That is not the same question as "does Bitcoin have a visible exchange price?" BTC trades heavily, but the condition is tested against the IFRS 13 definition of an active market and the entity's own market facts; preferring current values on the balance sheet is not a basis for the election.

Two conditions travel with it. Revalue one asset and every other asset in its class must follow, unless there is no active market for those assets (IAS 38.72); an asset in a revalued class that cannot be revalued for want of an active market stays at cost less accumulated amortisation and impairment losses (IAS 38.81).

Where the model is valid, an increase goes to other comprehensive income and accumulates as revaluation surplus, except to the extent it reverses a revaluation decrease of the same asset previously recognised in profit or loss (IAS 38.85); a decrease goes to profit or loss, except to the extent of any credit balance in that asset's surplus (IAS 38.86). One error recurs often enough to name: recycling the surplus through profit or loss on disposal. IAS 38.87 does not permit it: the transfer to retained earnings is made within equity.

Bitcoin fair value under IFRS 13

Whenever another Standard requires or permits fair value (the revaluation model, an IAS 2 broker-trader measurement), IFRS 13 supplies the framework and its disclosures. The IAS 36 fair-value-less-costs-of-disposal route is different: IFRS 13 supplies the measurement framework, but IFRS 13.7(c) exempts "assets for which recoverable amount is fair value less costs of disposal in accordance with IAS 36" from its disclosures. IAS 36.130(e)-(f) governs there instead, requiring the hierarchy level, the valuation technique and the key assumptions. The hard question is rarely whether a price exists; it is which market and which price. IFRS 13.16 assumes the transaction takes place in the principal market for the asset (the market with the greatest volume and level of activity that the entity can access) or, absent one, the most advantageous market. Neither is the best of ten quotes surveyed after period end. An unadjusted quoted price for identical BTC in an active market the entity can access at the measurement date is a Level 1 input (IFRS 13.76). Transaction costs sit outside the measurement: IFRS 13.25 states that the price in the principal market shall not be adjusted for them, because they are a characteristic of the transaction rather than of the asset. Another standard may include qualifying costs in acquisition cost or on disposal; they never enter the exit price.

Choosing and evidencing that observation is a policy exercise in its own right, worked through in Bitcoin valuation for accounting, and the fair market value that reaches the ledger is only as defensible as the market analysis behind it.

Derecognition: a blockchain transfer is not enough

IAS 38.112 derecognises an intangible asset on disposal, or when no future economic benefits are expected from its use or disposal. The chain shows a transfer without explaining the arrangement behind it: one movement can be a sale, a payment, a move between the entity's own wallets, a custodian deposit, collateral, a loan, a theft, or change.

Bitcoin tracks value as unspent transaction outputs (UTXOs): discrete chunks of BTC locked to a spending condition, each of which a later transaction must consume whole and replace with new outputs. A move between an entity's own wallets destroys old UTXOs and creates new ones without anything leaving the entity, so it is no disposal; a lending transfer does the opposite, removing native BTC while an application still displays "BTC receivable." Derecognition follows the contract, rights, control and recovery facts, not a transaction hash.

Mining is not solved by the 2019 holdings decision

The agenda decision addresses holdings after acquisition. It does not say when a miner recognises a block reward, or what it credits. The operational mechanics of pools, shares and payouts are set out in Bitcoin mining accounting; what follows is the IFRS overlay on top of them.

Mining-pool participant. Where an enforceable pool agreement identifies the operator as a customer obtaining a specified hashing or validation service, IFRS 15 can apply, and the participant works through the performance obligation, when control transfers, variable consideration, and whether a retained pool fee reduces revenue or buys a distinct service. Two points are regularly missed. Under IFRS 15.68, variability arising from the form of the consideration (the BTC price itself) does not trigger the constraint on variable consideration; only variability for other reasons, such as whether a block succeeds, does. And IFRS 15.66 requires non-cash consideration to be measured at fair value without specifying a measurement date, so the entity must adopt a consistent policy and disclose it. That is a genuine divergence from US GAAP, where ASC 606-10-32-21 fixes the date at contract inception (ASU 2016-12).

Solo miner. A decentralised network is not readily an identifiable customer with an enforceable contract, so IFRS 15 does not fit the protocol subsidy. Where no Standard applies specifically, IAS 8.10-11 require management to develop a relevant and reliable policy by reference first to Standards dealing with similar and related issues and to the Conceptual Framework; IAS 8.12 then permits other standard-setters' pronouncements, other accounting literature and accepted industry practices, so far as they do not conflict with that hierarchy. That is the tier that makes non-authoritative interpretation such as KPMG's June 2026 mining analysis usable at all, and the reason it must be labelled interpretation rather than IFRS. Block acceptance into the active chain, later confirmations and the 100-block coinbase spending restriction evidence different things; they are not three interchangeable recognition dates.

ASICs, electricity and hosting are separate questions

Mining runs on application-specific integrated circuits (ASICs): chips built to do one job, the repeated hashing the network requires. Hardware meeting the recognition criteria is property, plant and equipment under IAS 16: cost includes the directly attributable costs of bringing the machines to the location and condition necessary to operate, depreciation begins when they are available for use rather than when management judges mining profitable, and useful life, residual value and method are reviewed annually. Falling economics, obsolescence or damage are IAS 36 impairment indicators.

Idling usually does not stop the charge, but the qualifiers matter, and depreciation stops outright on IFRS 5 held-for-sale classification or on derecognition, whichever comes first, which is a live step for a miner marketing a curtailed fleet. IAS 16.55 states that depreciation does not cease when an asset becomes idle or is retired from active use unless the asset is fully depreciated, and the same paragraph adds that "under usage methods of depreciation the depreciation charge can be zero while there is no production." So the familiar warning that curtailing a fleet cuts revenue without cutting depreciation holds under a time-based method such as straight line, and fails under a units-of-production method, where the charge follows output. The method chosen is a substantive answer here, not a footnote.

Hosting needs a lease screen: under IFRS 16.9 a contract is, or contains, a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration, so an invoice headed "hosting" may still be a lease, while undifferentiated capacity the supplier can substantively substitute is not.

Operating costs follow the model, and the two cannot be mixed: under a service-revenue analysis, electricity, hosting and depreciation consumed in delivering the service are expensed as delivered. Under a supportable IAS 2 production analysis, eligible purchase and conversion costs enter BTC inventory, while abnormal waste, storage costs, administrative overheads that do not bring inventories to their present location and condition, and selling costs are excluded (IAS 2.16); unallocated fixed overhead from idle plant is expensed as incurred (IAS 2.13).

Bitcoin lending, borrowing and collateral

IFRS contains no Bitcoin-loan standard, so this is IAS 8 territory and should be described that way.

A lender must first determine whether it still controls the native BTC, or whether the transaction transferred control and left a contractual right to receive equivalent units later. That right is not a financial asset merely because the agreement says "loan": settlement in BTC is a right to a non-financial asset. The entity develops a recognition, measurement, remeasurement and impairment policy under the IAS 8.10-12 hierarchy; reuse rights, recall rights, collateral, default remedies, insolvency law and who bears theft risk are decisive contract facts.

A borrower that obtains control can have both a BTC asset and a separate obligation to return equivalent BTC. The same hierarchy applies to that non-cash obligation; yield is measured separately from principal; and the liability is not netted against the BTC or collateral without meeting the applicable offset criteria.

The ticker does not identify the accounting unit. Rights and obligations do.

Presentation, cash flows and the IFRS 18 change

An IAS 2 balance belongs with inventory; an IAS 38 balance with intangible assets, or a separate material line where the amount warrants it. The notes carry the policy, carrying amounts, impairment or revaluation effects, restrictions and pledges, and the significant judgements, the classification conclusion usually among them.

On derecognition, IAS 38.113 determines the gain or loss as the difference between net disposal proceeds and carrying amount and requires it to be recognised in profit or loss. It then restricts one side only: "Gains shall not be classified as revenue." It says nothing of the kind about losses. A mining company still cannot put a treasury disposal gain on the revenue line; a loss follows its normal expense presentation.

BTC is neither cash nor a cash equivalent under the 2019 analysis, so a transaction in which only BTC moves is non-cash for IAS 7 purposes; cash paid to acquire BTC and cash received on sale are classified by the nature and purpose of the activity. A BTC-only purchase of equipment, or repayment of a BTC-denominated borrowing, is an investing or financing transaction that does not require the use of cash, and IAS 7.43 requires it to be excluded from the statement of cash flows and disclosed elsewhere with the information needed to understand it.

IFRS 18 replaces IAS 1 from 1 January 2027

All of that is presentation, and the presentation standard is changing. IFRS 18 Presentation and Disclosure in Financial Statements supersedes IAS 1 and applies to annual reporting periods beginning on or after 1 January 2027, earlier application permitted (IFRS 18.C1). The UK Endorsement Board adopted it for UK use on 10 December 2025 on the same effective date; entities on EU-endorsed or other adopted IFRS should confirm their own endorsed date. IFRS 18 changes presentation and disclosure only, not how BTC is recognised or measured.

• FY2026 comparatives get restated. IFRS 18 is applied retrospectively applying IAS 8 (IFRS 18.C2), and for the comparative period immediately preceding first application the entity discloses a reconciliation, for each line item in the statement of profit or loss, between the restated amounts and those previously presented under IAS 1 (IFRS 18.C3). The FY2026 figures a calendar-year entity is preparing now (impairment charges, reversals, revaluation effects, disposal gains) are next year's restated comparatives.
• New required subtotals. IFRS 18.69 requires totals and subtotals for operating profit or loss, profit or loss before financing and income taxes (subject to the IFRS 18.73 exception), and profit or loss. Where a BTC impairment, reversal or disposal gain sits relative to them becomes a documented decision, not a by-product of the chart of accounts.
• The balance-sheet lines survive. IFRS 18.103 requires line items for intangible assets (103(c)) and inventories (103(i)), so the IAS 2 or IAS 38 conclusion still drives the face of the balance sheet.
• IAS 8 is renamed Basis of Preparation of Financial Statements from the same date. The policy hierarchy relied on above stays at IAS 8.10-12; the title in the policy note changes.

The cash flow statement changes too. Under the amended IAS 7.18(b), the indirect method starts from operating profit or loss, where the paragraph previously required adjusting profit or loss (profit before tax was common practice, not the requirement), so a miner's reconciliation begins at a different line and the non-cash adjustments beneath it must be re-mapped. IFRS 18's Appendix D makes further consequential amendments to other Standards, IFRS 15.43 among them, to be applied when IFRS 18 is applied.

IAS 12: book basis and tax basis can diverge

Financial reporting and tax accounting answer different questions and belong in separate ledgers. IAS 12 measures current tax at the amount expected to be paid to or recovered from the tax authority under enacted or substantively enacted law, then compares an asset's carrying amount with its tax base.

Suppose a cost-model holder records an impairment that reduces the carrying amount of BTC while the jurisdiction leaves tax basis unchanged until disposal. That gap is a candidate deductible temporary difference, not a current deduction merely because the accounts recorded a loss. Under IAS 12.24 a deferred tax asset is recognised for it only to the extent that it is probable that taxable profit will be available against which it can be utilised; under IAS 12.47 deferred tax is measured at the rates expected to apply when the difference reverses, based on rates and laws enacted or substantively enacted by the reporting date. The direction reverses if an eligible revaluation lifts carrying amount above tax basis. Where the underlying movement is recognised in other comprehensive income (an IAS 38 revaluation increase being the obvious case), IAS 12.61A recognises the related tax there too, and where the tax position itself is uncertain IFRIC 23 adds requirements for reflecting that uncertainty.

Keep three histories per position: BTC quantity as the protocol records it; carrying amount and accounting-lot history; and jurisdiction-specific tax basis and tax-lot history.

The order that keeps it right

Bitcoin accounting under IFRS is a sequence rather than a lookup, and each step constrains the next. Our crypto accounting guide covers the wider workflow this sits inside.

Identify the asset -> establish rights and control -> classify under IAS 2 or IAS 38 -> identify the transaction that created it -> apply subsequent measurement -> test derecognition when rights change -> apply presentation, cash-flow and tax accounting.

More in this series

Accounting Token Anatomy: Bitcoin. This article stands alone, but the series builds in order.

Previous (01.1.6): Bitcoin Mining Accounting: Rewards, Pools, Revenue, ASICs and Costs

Next (01.1.8): Bitcoin Accounting Under US GAAP: ASC 350-60, Fair Value and Disclosures

Sources and further reading

• IFRS Interpretations Committee, Holdings of Cryptocurrencies, June 2019
• IAS 2, Inventories
• IAS 38, Intangible Assets
• IAS 36, Impairment of Assets
• IFRS 13, Fair Value Measurement
• IFRS 15, Revenue from Contracts with Customers
• IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, retitled Basis of Preparation of Financial Statements by IFRS 18 with effect from 1 January 2027
• IAS 16, Property, Plant and Equipment
• IAS 7, Statement of Cash Flows, and the 2026 issued text incorporating the IFRS 18 amendment to paragraph 18(b)
• IAS 21, The Effects of Changes in Foreign Exchange Rates
• IFRS 16, Leases
• IFRS 18, Presentation and Disclosure in Financial Statements and the 2026 issued text
• UK Endorsement Board, UKEB adopts IFRS 18, published 12 December 2025
• IAS 12, Income Taxes
• IFRIC 23, Uncertainty over Income Tax Treatments
• FASB ASU 2016-12, ASC 606 non-cash consideration measurement date
• KPMG, Crypto mining activities, 4 June 2026

Educational research, not accounting, tax, legal, valuation or investment advice. Apply the standards to the entity's actual facts, contracts, materiality and jurisdiction.