PLBY Group, the parent company of Playboy founded by Hugh Hefner, reported a $4.9 million impairment loss on its Ethereum holdings in the previous year during the crypto winter, according to an annual filing.

Playboy's annual filing reveals that the company's digital assets as of December 31, 2022 and 2021 were comprised of Ethereum obtained from the sales of their non-fungible tokens, known as "Rabbitar". As of those dates, the carrying value of their digital assets was $0.3 million and $6.8 million, respectively. Despite this, the company reported impairment charges for their digital assets during the years ended December 31, 2022, 2021, and 2020, totaling $4.9 million, $1.0 million, and $0, respectively.

During the peak of the crypto market in October 2021, the company initiated its "Rabbitar" NFT project and accepted Ethereum as payment.

"We account for our digital assets as indefinite-lived intangible assets, which are subject to impairment losses if the fair value of our digital assets decreases below their carrying value at any time. Impairment losses cannot be recovered for any subsequent increase in fair value. For example, the market price of one Ethereum in our principal market ranged from $964 - $3,813 during the year ended December 31, 2022, but the carrying value of each Ethereum we held 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. Therefore, negative swings in the market price of Ethereum could have a material impact on our earnings and on the carrying value of our digital assets. Positive swings in the market price of Ethereum are not reflected in the carrying value of our digital assets and impact earnings only when the Ethereum is sold at a gain. For the year ended December 31, 2022, we incurred an impairment loss of $4.9 million on our Ethereum." Playboy further explained in the filing.