SharpLink lost $394 million in the second quarter due to Ethereum writedowns

SharpLink lost $394.3 million in the second quarter, with falling ETH prices resulting in unrealized losses and impairment of $397.1 million.

Summary: SharpLink's net loss was $394.3 million, compared with $103.4 million in the same period last year. ETH market conditions resulted in an unrealized loss of $321 million for the quarter. Impairment of LsETH and weETH resulted in non-cash expenses of US$76.1 million. As of the end of June, the company held 886,881 ETH and ETH equivalents.

ETH impairment exceeds revenue growth

SharpLink's second-quarter earnings report showed revenue of $11.5 million in the three months ended June 30, compared with approximately $697,000 in the same period last year. The quarterly loss mainly came from cryptocurrency holdings rather than operating expenses. As ETH fell in price during the quarter, the company recorded an unrealized loss of $321 million on assets measured at fair value. In addition, an additional $76.1 million was charged for impairment of LsETH and weETH positions. SharpLink stated that both fees are non-cash items and do not reduce the number of ETH or ETH equivalent tokens it controls. However, the impairment still reduced the book value of these two liquid pledged tokens under U.S. GAAP, and the company stated that even if the market value of LsETH or weETH subsequently rebounded, the impairment could not be reversed. SharpLink reported a diluted loss per share of $1.88, compared with $4.27 for the same period in 2025. The overall net loss expanded from $103.4 million in the same period last year, when unrealized encryption losses were only $2.4 million. The latest results follow a larger loss in the first quarter. SharpLink lost $685.6 million in the first quarter, which included $506.7 million in unrealized losses on ETH and $191.7 million in LsETH impairment. In the first half of 2026, SharpLink's net loss reached US$1.08 billion, of which unrealized encryption losses were US$827.7 million and impairment charges were US$267.8 million.

Pledge business contributes most of SharpLink's revenue

As SharpLink implemented its ETH funding strategy throughout the quarter, revenue increased more than 15 times compared to the same period last year. The strategy was launched on June 2, 2025, so the relevant activities were less than one month during the comparable period. Pledge business contributed US$11.2 million to SharpLink's US$11.5 million revenue in the second quarter. Pledge revenue reached US$22.7 million in the first half of 2026, and ETH revenue became the main source of the company's reported revenue. As the scale of the capital business expands, costs also increase. Selling, general and administrative expenses increased to $9.1 million from $2.4 million in the same period last year due to increases in personnel, custody, insurance, legal and accounting expenses. SharpLink's reliance on pledged revenue has also drawn it into the Ethereum circulation debate. CEO Joseph Chalom recently opposed a proposal that could eventually eliminate issue-based pledge rewards, arguing that native earnings would help distinguish ETH from non-yielding assets such as Bitcoin. While Chalom discussed the proposal, the company had received more than 18,000 ETH pledge rewards. Therefore, even if the number of tokens on the balance sheet remains the same, a decrease in validator issuance may affect SharpLink's capital income.

SharpLink holds US$1.4 billion in crypto assets

As of June 30, SharpLink controlled approximately 886,881 ETH and ETH equivalents, including 632,784 native ETH, 181,321 ETH (represented by LsETH) and 72,776 ETH (represented by weETH) on a redemption basis. Its crypto asset portfolio has a total value of approximately $1.4 billion under U.S. GAAP, of which $988.8 million is in assets measured at fair value and $369.1 million is in crypto assets held at cost. Total assets fell to US$1.42 billion from US$2.43 billion at the end of 2025, mainly due to the decline in the valuation of crypto assets. During the same period, shareholders 'equity fell from US$2.42 billion to US$1.41 billion, and cumulative losses increased to US$1.89 billion. For U.S. investors, SharpLink's data shows that changes in cryptocurrency prices can cause large fluctuations in reported earnings without accompanying equal cash losses or token sales. Its unrealized loss of $321 million has been charged to the income statement, although the company still retained the affected ETH. At the end of June, cash and cash equivalents increased to $56.2 million from $28.5 million on December 31. SharpLink spent approximately $7.2 million in operating cash during the quarter, distinguishing its actual operating cash use from larger accounting losses related to crypto assets.

Stock issue refinancing to purchase 10,000 ETH units

SharpLink completed a registered direct offering of US$75 million on June 23, issuing 10,013,351 ordinary shares and accompanying warrants at a total price of US$7.49 per share. The company said the offering price was higher than its net asset value. Part of the proceeds was used to purchase approximately 10,000 ETH units at an average price of US$1,611. The deal continues the company's trend of resuming increased holdings after SharpLink resumed buying ETH after an eight-month suspension. The company also bought back approximately 2.1 million shares of common stock during the quarter at an average price of $4.70, at a cost of approximately $10 million. Since launching the program in August 2025, SharpLink has repurchased a cumulative 4,071,223 shares, with a total amount of US$41.7 million. Although the issuance increased the number of shares outstanding, buybacks reduced a smaller proportion of publicly held shares. SharpLink described both transactions as part of its efforts to manage the corresponding number of ETH per share. The Nasdaq-listed company was included in the Russell 2000 and Russell 3000 indexes during the June index adjustment period, making SBET a target that can be held by U.S. funds tracking these benchmarks. Its share price closed at $6.43 on August 7, rising 2.23% on the day before the results were announced. As of August 3, SharpLink's funding has increased to approximately 888,938 ETH and ETH equivalents. After the quarter ended, the company also committed to investing $100 million in the Galaxy SharpLink Onchain Yield Fund ($125 million), with Galaxy contributing the remaining $25 million and serving as its investment manager.