SharpLink and $735 million in "paper" losses: Is Ethereum's "Strategy" Suffering?

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SharpLink Gaming (SBET) posted a net loss of $734.6 million in 2025. $616.2 million of this figure has accrued “unexpected losses” (a decrease in the value of the assets they still hold) in the massive pile of Ethereum (ETH). Those numbers are even higher in March 2026, with a -$1.3 billion P&L, as the price of ETH is just over $2,000.

SharpLink Ethereum PnL Strategy Source: StrategicEthReserve

While the stock value of their portfolio took a hit during the second half of the market, the company’s core engine was doing exactly what it was designed to do. Through Ethereum staking rewards, SharpLink has earned around 14,000 ETH in passive income. This creates an interesting tension for investors: do you focus on the accounting losses caused by the volatility, or the increasing amount of Ethereum that the company accumulates?

2025 was a groundbreaking year for Sharplink. We have launched and implemented an Ethereum treasury strategy.

End of the year photo:

→ 864,597 ETH are stored in our treasury
→ $28.1 million in revenue
→ 46% institutional ownership

Here’s how we got here pic.twitter.com/LjUTXbgoOg

— Sharplink (@Sharplink) March 9, 2026

SharpLink Ethereum Strategy: $616 Million in “Unrealized Losses”

In order to understand SharpLink Gaming’s financial statements, you need to understand a specific aspect of corporate accounting called GAAP (Generally Accepted Accounting Principles). According to these rules, companies with cryptographic assets are often required to mark the value of these assets at the market price at the end of the reporting period.

This is how it works. Imagine you bought a house for $500,000. The market has dropped and now your home is worth $400,000. You haven’t sold the house. You still live in it. But if you were a public company like SBET, you would have to report a $100,000 “loss” on your income statement.

This is exactly what happened with SharpLink. The company has 868,699 ETH. As the price of Ethereum fell from its August high of $4,829 to close the year near $3,000, accounting rules forced the company to report massive unrealized losses.

This is a “paper loss”: if the price of Ethereum rises, as Standard Chartered analysts predict in the long run, this loss can be returned to unrealized profit just as quickly.

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Staking Profit Story: 14,000 ETH in passive income

Unlike Bitcoin funds held by companies like Strategy, Ethereum funds have a distinct advantage: the ability to contribute.

Staking allowed SharpLink to generate around 14,000 new Ethereum in 2025. This is a dividend paid in crypto. The company is not only betting on the rise in the price of ETH; they will automatically increase their ETH stack.

Traditional institutions love yield. By converting its shares to Ether, SharpLink generated $15.3 million in revenue in the fourth quarter alone. This is 48.5 percent more than the previous quarter.

This dynamic highlights why Ethereum often dominates capital flows. While Bitcoin sits in storage, Ethereum is staked. For SBET, the goal is not only to store ETH, but also to increase the amount of ETH represented by each share.

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SBET Investors: Bulls and Bears Events

The brilliant argument is simple: aggregation. SharpLink was able to double its ETH ratio in 2025, going from 2 ETH per share to 4.01 ETH per share. If Ethereum returns to its highs, the company’s net asset value (NAV) will rise not only because the price is high, but because it has so many coins. The company is led by Ethereum co-founder Joseph Lubin, who has deep industry connections and a long-term commitment to the asset class similar to Michael Saylor’s commitment to Bitcoin.

For the descent mode, the risk is the elevator gear and collapse. While a sudden loss won’t bankrupt a company, a steady market can. If the price of Ethereum falls significantly, by testing a critical support level, the company’s assets will decrease relative to its liabilities. Investors should carefully analyze the $2,000 support level. If ETH falls below this level again, the pressure on SBET’s balance sheet could become unstable.