Bitcoin accounting got simple in 2025. Record at cost when you buy, adjust to market value each quarter, and report gains/losses. Your bookkeeper can handle basic entries; you may need a CPA for tax optimization or complex situations.
The #1 concern small business owners have about Bitcoin treasury: “How do I account for this?”
Good news: FASB fixed this in 2025. The new rules are straightforward, and for most small businesses, your existing bookkeeper can handle it with a little guidance.
Here’s exactly how it works.
The 2025 Rules: Fair Value Accounting
Starting January 2025, Bitcoin follows FASB ASU 23-08. The key points:
| Aspect | How It Works |
|---|---|
| When you buy | Record at purchase price (cost) |
| Each quarter | Adjust to current market value |
| Gains | Recognized in net income |
| Losses | Recognized in net income |
| Balance sheet | Separate line item (not buried in intangibles) |
This is called “fair value through net income.” Your Bitcoin is always shown at what it’s actually worth.
Basic Journal Entries
Entry 1: Buying Bitcoin
You purchase $10,000 worth of Bitcoin.
Date: [Purchase Date]
DR Digital Assets - Bitcoin $10,000
CR Cash (Business Checking) $10,000
Memo: Purchase of 0.10 BTC @ $100,000
Where to put it in your chart of accounts: - Create “Digital Assets” or “Bitcoin” under Other Assets - It’s a non-current asset if you plan to hold long-term - Keep it separate from other intangibles
Entry 2: Quarter-End Fair Value Increase
Quarter ends. Bitcoin price is up 20%. Your $10,000 is now worth $12,000.
Date: [Quarter End Date]
DR Digital Assets - Bitcoin $2,000
CR Unrealized Gain - Digital Assets $2,000
Memo: Q1 fair value adjustment, BTC @ $120,000
Entry 3: Quarter-End Fair Value Decrease
Next quarter, Bitcoin drops 15%. Your holdings are now worth $10,200.
Date: [Quarter End Date]
DR Unrealized Loss - Digital Assets $1,800
CR Digital Assets - Bitcoin $1,800
Memo: Q2 fair value adjustment, BTC @ $102,000
Entry 4: Selling Bitcoin
You sell your Bitcoin for $11,000.
Date: [Sale Date]
DR Cash (Business Checking) $11,000
CR Digital Assets - Bitcoin $10,200
CR Gain on Sale - Digital Assets $800
Memo: Sale of 0.10 BTC @ $110,000
Chart of Accounts Setup
Add these accounts if you don’t have them:
| Account | Type | Where It Goes |
|---|---|---|
| Digital Assets - Bitcoin | Asset | Balance Sheet → Other Assets |
| Unrealized Gain - Digital Assets | Income | Income Statement → Other Income |
| Unrealized Loss - Digital Assets | Expense | Income Statement → Other Expense |
| Gain on Sale - Digital Assets | Income | Income Statement → Other Income |
| Loss on Sale - Digital Assets | Expense | Income Statement → Other Expense |
How to Determine Fair Value
You need the Bitcoin price at quarter-end. Options:
Option 1: Major Exchange Price
Use the price from Coinbase, Kraken, or your exchange at market close (midnight UTC) on the last day of the quarter.
Option 2: CoinGecko/CoinMarketCap
These aggregate prices from multiple exchanges. Reasonable for small amounts.
Option 3: Your Custodian’s Statement
If you use a custodian like BitGo or Coinbase Custody, they’ll provide statements with fair value.
Document your methodology. Whichever source you use, be consistent and keep records.
Quarterly Close Checklist
Every quarter-end:
- [ ] Get Bitcoin price at quarter-end
- [ ] Calculate new fair value (BTC quantity × price)
- [ ] Compare to current book value
- [ ] Make journal entry for the difference
- [ ] Document source of price data
- [ ] Update any reports
QuickBooks / Xero Setup
QuickBooks Online
- Go to Settings → Chart of Accounts
- Click New
- Account Type: Other Current Assets (or Non-Current if long-term)
- Detail Type: Other Current Assets
- Name: Digital Assets - Bitcoin
- Save
For income/expense accounts, use Other Income and Other Expense types.
Xero
- Go to Accounting → Chart of Accounts
- Click Add Account
- Account Type: Current Asset (or Fixed Asset if long-term)
- Code: Pick an unused code
- Name: Digital Assets - Bitcoin
- Save
Making Entries
Both platforms support journal entries:
- QuickBooks: + New → Journal Entry
- Xero: Accounting → Manual Journal
When You Need a CPA
Your bookkeeper can handle basic Bitcoin accounting. You may need a CPA for:
Tax Optimization
- Timing of sales for tax purposes
- Specific identification vs. FIFO
- State tax considerations
Complex Situations
- Multiple purchases at different prices
- Receiving Bitcoin as payment
- Bitcoin compensation to employees
- Multi-entity structures
Audit Preparation
- If your company is audited
- If you’re preparing for sale/investment
- If crossing size thresholds
Finding a Crypto-Savvy CPA
Look for CPAs with:
- Cryptocurrency or digital asset experience
- AICPA digital asset resources familiarity
- Clients in tech or crypto industries
Resources:
- AICPA Digital Asset Resources
- Digital Asset Council
- Ask your exchange for referrals
Tax Implications (Not Tax Advice)
Accounting and taxes are separate. Key points:
| Event | Accounting Impact | Tax Impact |
|---|---|---|
| Buy Bitcoin | Record asset | None |
| Hold (price up) | Book unrealized gain | None until sale |
| Hold (price down) | Book unrealized loss | None until sale |
| Sell at profit | Book realized gain | Capital gain |
| Sell at loss | Book realized loss | Capital loss |
The fair value adjustments don’t trigger taxes. Taxes are owed only when you sell (realize the gain or loss).
Holding period matters: - Held < 1 year: Short-term capital gain (ordinary income rates) - Held > 1 year: Long-term capital gain (lower rates)
Always consult a tax professional for your specific situation.
Common Questions
Do I need to mark-to-market daily?
No. Quarterly is standard for reporting. Some companies adjust monthly for internal reporting, but it’s not required.
What if Bitcoin is in multiple wallets?
Track all Bitcoin together as one pool for accounting purposes (unless you need to track specific lots for tax optimization).
How do I handle exchange fees?
Two approaches: 1. Capitalize: Add fees to your cost basis 2. Expense: Deduct fees as transaction costs
Either is acceptable. Be consistent.
What about Bitcoin I receive as payment?
Record it as revenue at the fair value when received:
DR Digital Assets - Bitcoin $500
CR Revenue $500
Then apply normal fair value adjustments going forward.
Next Steps
- Set up accounts in your bookkeeping software
- Document your fair value source (which exchange/aggregator)
- Make your first entry when you purchase
- Set quarterly reminder for fair value adjustments
- Read the full FASB guide: Bitcoin Treasury Accounting FASB 2025
Track which companies hold Bitcoin at BitcoinCompanies.co.