Georgia Tech Professor Awarded John Templeton Foundation Grant

Evolved snowflake yeast

 

Will Ratcliff, the John C. and Leslie C. Sutherland Professor in the School of Biological Sciences, has been awarded a grant from the John Templeton Foundation. The philanthropic organization’s awards are reserved for scientific research into awe-inspiring topics and will enable Ratcliff to continue groundbreaking research into the origins of multicellular life. 

Ratcliff’s lab has pioneered one of the world’s longest-running evolution experiments.  For more than a decade, the lab’s snowflake yeast has completed tens of thousands of life cycles. This work has provided a unique lens for studying how single-celled organisms make the leap to multicellularity, gradually evolving from simple clumps of cells into organisms. It’s among the first to demonstrate how single cells grow into the multicellular organisms that form the basis of all life, from fungi to fauna. 

“This grant is based on a conceptual breakthrough that emerged only after more than a decade of observing multicellular life evolve,” Ratcliff said.

The research is now at the stage when funding from organizations like Templeton is crucial. Ratcliff’s grant focuses on the concept of “agency,” or how a cell determines its function. 

“The human body contains 39 trillion cells — most of which help us survive and reproduce — yet they themselves won’t pass on their genetic material,” Ratcliff said. “For example, skin cells are never going to make a new human. 

“Multicellular organisms began as small groups where every cell contributed to reproduction. Over time, some cells shifted to supportive roles that didn’t reproduce, instead helping specialized reproductive cells, like sperm and eggs, succeed.”

This shift, in which most cells in an organism have given up the ability to reproduce, represents a fundamental shift biological agency. 

“It’s a key step in the evolution of complex life, as it allows organisms to make things like muscles, neurons, and skin cells,” Ratcliff said. 

But how did it begin? The researchers hypothesize that this shift in agency can occur very early in evolution, as a physical side effect of creating large, tough bodies. As multicellular organisms grow physically larger, cells on the interior may effectively become “stuck,” unable to ever leave the group. Much like a nerve cell in the body, these cells will never form a new organism. Instead, they are incentivized to help the reproductive cells in the organism succeed. 

“We’ve long thought that this type of specialization could only occur after a great deal of genetic modification,” Ratcliff said. “Yet that’s not what appears to be happening in snowflake yeast — it seemingly happens ‘for free’ as a side effect of simple cellular biophysics very early in the transition to multicellularity.” 

With the funding, Ratcliff and his frequent collaborator, School of Physics Associate Professor Peter Yunker, will be able to test this hypothesis using the group’s existing yeast. 

"This award will enable us to address crucial questions about the evolution of multicellularity — and the role that physics plays in the process,” Yunker said.

Their results could fundamentally reshape our understanding of evolution, showing how the simplest life forms can give rise to extraordinary complexity. With each yeast cell, the researchers are uncovering the building blocks of life itself.

 

 

 
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Researchers Find Opportunities for 311 Chatbots to Foster Community Engagement

Jieyu Zhou

311 chatbots make it easier for people to report issues to their local government without long wait times on the phone. However, a new study finds that the technology might inhibit civic engagement.

311 systems allow residents to report potholes, broken fire hydrants, and other municipal issues. In recent years, the use of artificial intelligence (AI) to provide 311 services to community residents has boomed across city and state governments. This includes an artificial virtual assistant (AVA) developed by third-party vendors for the City of Atlanta in 2023.

Through survey data, researchers from Tech’s School of Interactive Computing found that many residents are generally positive about 311 chatbots. In addition to eliminating long wait times over the phone, they also offer residents quick answers to permit applications, waste collection, and other frequently asked questions.

However, the study, which was conducted in Atlanta, indicates that 311 chatbots could be causing residents to feel isolated from public officials and less aware of what’s happening in their community.

Jieyu Zhou, a Ph.D. student in the School of IC, said it doesn’t have to be that way.

Uniting Communities

Zhou and her advisor, Assistant Professor Christopher MacLellan, published a paper at the 2025 ACM Designing Interactive Systems (DIS) Conference that focuses on improving public service chatbot design and amplifying their civic impact. They collaborated with Professor Carl DiSalvo, Associate Professor Lynn Dombrowski, and graduate students Rui Shen and Yue You.

Zhou said 311 chatbots have the potential to be agents that drive community organization and improve quality of life.

“Current chatbots risk isolating users in their own experience,” Zhou said. “In the 311 system, people tend to report their own individual issues but lose a sense of what is happening in their broader community. 

“People are very positive about these tools, but I think there’s an opportunity as we envision what civic chatbots could be. It’s important for us to emphasize that social element — engaging people within the community and connecting them with government representatives, community organizers, and other community members.”

Zhou and MacLellan said 311 chatbots can leave users wondering if others in their communities share their concerns.

“If people are at a town hall meeting, they can get a sense of whether the problems they are experiencing are shared by others,” Zhou said. “We can’t do that with a chatbot. It’s like an isolated room, and we’re trying to open the doors and the windows.”

Adding a Human Touch

In their paper, the researchers note that one of the biggest criticisms of 311 chatbots is they can’t replace interpersonal interaction.

Unlike chatbots, people working in local government offices are likely to:

  • Have direct knowledge of issues
  • Provide appropriate referrals
  • Empathize with the resident’s concerns

MacLellan said residents are likely to grow frustrated with a chatbot when reporting issues that require this level of contextual knowledge.

One person in the researchers’ survey noted that the chatbot they used didn’t understand that their report was about a sidewalk issue, not a street issue.

“Explaining such a situation to a human representative is straightforward,” MacLellan said. “However, when the issue being raised does not fall within any of the categories the chatbot is built to address, it often misinterprets the query and offers information that isn’t helpful.”

The researchers offer some design suggestions that can help chatbots foster community engagement and improve community well-being:

  • Escalation. Regarding the sidewalk report, the chatbot did not offer a way to escalate the query to a human who could resolve it. Zhou said that this is a feature that chatbots should have but often lack.
  • Transparency. Chatbots could provide details about recent and frequently reported community issues. They should inform users early in the call process about known problems to help avoid an overload of user complaints.
  • Education. Chatbots can keep users updated about what’s happening in their communities.
  • Collective action. Chatbots can help communities organize and gather ideas to address challenges and solve problems.

“Government agencies may focus mainly on fixing individual issues,” Zhou said, “But recognizing community-level patterns can inspire collective creativity. For example, one participant suggested that if many people report a broken swing at a playground, it could spark an initiative to design a new playground together—going far beyond just fixing it.”

These are just a few examples of things, the researchers argue, that 311 services were originally designed to achieve.

“Communities were already collaborating on identifying and reporting issues,” Zhou said. “These chatbots should reflect the original intentions and collaboration practices of the communities they serve.

“Our research suggests we can increase the positive impact of civic chatbots by including social aspects within the design of the system, connecting people, and building a community view.”

 

NASA Goes On an ESCAPADE – Twin Small, Low-Cost Orbiters Will Examine Mars’ Atmosphere

This close-up illustration shows what one of the twin ESCAPADE spacecraft will look like conducting its science operations. James Rattray/Rocket Lab USA/Goddard Space Flight Center

This close-up illustration shows what one of the twin ESCAPADE spacecraft will look like conducting its science operations. James Rattray/Rocket Lab USA/Goddard Space Flight Center

Envision a time when hundreds of spacecraft are exploring the solar system and beyond. That’s the future that NASA’s ESCAPADE, or Escape and Plasma Acceleration and Dynamics Explorers, mission will help unleash: one where small, low-cost spacecraft enable researchers to learn rapidly, iterate, and advance technology and science.

The ESCAPADE mission launched on Nov. 13, 2025 on a Blue Origin New Glenn rocket, sending two small orbiters to Mars to study its atmosphere. As aerospace engineers, we’re excited about this mission because not only will it do great science while advancing the deep space capabilities of small spacecraft, but it also will travel to the red planet on an innovative new trajectory.

The ESCAPADE mission is actually two spacecraft instead of one. Two identical spacecraft will take simultaneous measurements, resulting in better science. These spacecraft are smaller than those used in the past, each about the size of a copy machine, partly enabled by an ongoing miniaturization trend in the space industry. Doing more with less is very important for space exploration, because it typically takes most of the mass of a spacecraft simply to transport it where you want it to go.

A patch with a drawing of two spacecraft, one behind the other, on a red background and the ESCAPADE mission title.

The ESCAPADE mission logo shows the twin orbiters. TRAX International/Kristen Perrin

Having two spacecraft also acts as an insurance policy in case one of them doesn’t work as planned. Even if one completely fails, researchers can still do science with a single working spacecraft. This redundancy enables each spacecraft to be built more affordably than in the past, because the copies allow for more acceptance of risk.

Studying Mars’ History

Long before the ESCAPADE twin spacecraft Blue and Gold were ready to go to space – billions of years ago, to be more precise – Mars had a much thicker atmosphere than it does now. This atmosphere would have enabled liquids to flow on its surface, creating the channels and gullies that scientists can still observe today.

But where did the bulk of this atmosphere go? Its loss turned Mars into the cold and dry world it is today, with a surface air pressure less than 1% of Earth’s.

Mars also once had a magnetic field, like Earth’s, that helped to shield its atmosphere. That atmosphere and magnetic field would have been critical to any life that might have existed on early Mars.

A view of Mars' crater-flecked surface from above.

Today, Mars’ atmosphere is very thin. Billions of years ago, it was much thicker. ©UAESA/MBRSC/HopeMarsMission/EXI/AndreaLuck, CC BY-ND

ESCAPADE will measure remnants of this magnetic field that have been preserved by ancient rock and study the flow and energy of Mars’ atmosphere and how it interacts with the solar wind, the stream of particles that the sun emits along with light. These measurements will help to reveal where the atmosphere went and how quickly Mars is still losing it today.

Weathering Space on a Budget

Space is not a friendly place. Most of it is a vacuum – that is, mostly empty, without the gas molecules that create pressure and allow you to breathe or transfer heat. These molecules keep things from getting too hot or too cold. In space, with no pressure, a spacecraft can easily get too hot or too cold, depending on whether it is in sunlight or in shadow.

In addition, the Sun and other, farther astronomical objects emit radiation that living things do not experience on Earth. Earth’s magnetic field protects you from the worst of this radiation. So when humans or our robotic representatives leave the Earth, our spacecraft must survive in this extreme environment not present on Earth.

ESCAPADE will overcome these challenges with a shoestring budget totaling US$80 million. That is a lot of money, but for a mission to another planet it is inexpensive. It has kept costs low by leveraging commercial technologies for deep space exploration, which is now possible because of prior investments in fundamental research.

For example, the GRAIL mission, launched in 2011, previously used two spacecraft, Ebb and Flow, to map the Moon’s gravity fields. ESCAPADE takes this concept to another world, Mars, and costs a fraction as much as GRAIL.

Led by Rob Lillis of UC Berkeley’s Space Sciences Laboratory, this collaboration between spacecraft builders Rocket Lab, trajectory specialists Advanced Space LLC and launch provider Blue Origin – all commercial partners funded by NASA – aims to show that deep space exploration is now faster, more agile and more affordable than ever before.

NASA’s ESCAPADE represents a partnership between a university, commercial companies and the government.

How Will ESCAPADE Get to Mars?

ESCAPADE will also use a new trajectory to get to Mars. Imagine being an archer in the Olympics. To hit a bull’s-eye, you have to shoot an arrow through a 15-inch – 40-centimeter – circle from a distance of 300 feet, or 90 meters. Now imagine the bull’s-eye represents Mars. To hit it from Earth, you would have to shoot an arrow through the same 15-inch bull’s-eye at a distance of over 13 miles, or 22 kilometers. You would also have to shoot the arrow in a curved path so that it goes around the Sun.

Not only that, but Mars won’t be at the bull’s-eye at the time you shoot the arrow. You must shoot for the spot that Mars will be in 10 months from now. This is the problem that the ESCAPADE mission designers faced. What is amazing is that the physical laws and forces of nature are so predictable that this was not even the hardest problem to solve for the ESCAPADE mission.

It takes energy to get from one place to another. To go from Earth to Mars, a spacecraft has to carry the energy it needs, in the form of rocket fuel, much like gasoline in a car. As a result, a high percentage of the total launch mass has to be fuel for the trip.

When going to Mars orbit from Earth orbit, as much as 80% to 85% of the spacecraft mass has to be propellant, which means not much mass is dedicated to the part of the spacecraft that does all the experiments. This issue makes it important to pack as much capability into the rest of the spacecraft as possible. For ESCAPADE, the propellant is only about 65% of the spacecraft’s mass.

ESCAPADE’s route is particularly fuel-efficient. First, Blue and Gold will go to the L2 Lagrange point, one of five places where gravitational forces of the Sun and Earth cancel out. Then, after about a year, during which they will collect data monitoring the Sun, they will fly by the Earth, using its gravitational field to get a boost. This way, they will arrive at Mars in about 10 more months.

This new approach has another advantage beyond needing to carry less fuel: Trips from Earth to Mars are typically favorable to save fuel about every 26 months due to the two planets’ relative positions. However, this new trajectory makes the departure time more flexible. Future cargo and human missions could use a similar trajectory to have more frequent and less time-constrained trips to Mars.

ESCAPADE is a testament to a new era in spaceflight. For a new generation of scientists and engineers, ESCAPADE is not just a mission – it is a blueprint for a new collaborative era of exploration and discovery.

This article was updated on Nov. 13, 2025 to reflect the ESCAPADE launch’s date and success.The Conversation

 

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 
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Authors:

Christopher Carr, Assistant Professor of Aerospace Engineering, Georgia Institute of Technology  

Glenn Lightsey, Professor of Space Systems Technology, Georgia Institute of Technology

Media Contact:

Shelley Wunder-Smith
shelley.wunder-smith@research.gatech.edu

Space Debris Struck a Chinese Spacecraft – How the Incident Could Be a Wake-up Call for International Collaboration

 China’s Shenzhou-20 spacecraft – shown here hitching a ride on a Long March-2F carrier rocket – was hit by a piece of space debris. Pedro Pardo/AFP via Getty Images

China’s Shenzhou-20 spacecraft – shown here hitching a ride on a Long March-2F carrier rocket – was hit by a piece of space debris. Pedro Pardo/AFP via Getty Images

China’s Shenzhou-20 spacecraft took a hit from a piece of space debris floating through orbit, causing Chinese officials to delay the spacecraft’s return from its Tiangong space station in early November 2025.

In addition to stranding the three Chinese astronauts – called taikonauts – who were set to return to Earth, this incident highlights the increasing risks posed to China and the broader international community by the growing amount of space debris.

I study China’s space program. My research suggests that national pride plays an important role in China’s growing space ambitions. As China continues to invest in expensive space capabilities, it will also likely become increasingly sensitive to losing them. The rise in space debris may create incentives for Chinese officials to cooperate with the United States on measures that reduce the risk of collisions.

Space Debris – a Growing Issue

Space debris is creating growing problems for space operations. It includes any artificial objects in orbit not operating as satellites or spacecraft. It ranges in size from a fleck of paint to large rocket bodies roughly the size of a school bus.

In the most commonly used orbit – low Earth orbit – this debris can move at speeds of roughly 18,000 mph, almost seven times the speed of a bullet. At such high speeds, even tiny pieces of space debris can be highly destructive, to the point that this debris might continue to multiply until one day it makes certain critical orbits unusable. When space debris collides with other objects and fragments, they can break into smaller pieces, generating even more debris.

It’s somewhat ironic that China’s spacecraft took a hit from space junk. The country is responsible for creating the majority of space debris. In 2007, China blew up a defunct Fengyun-1c weather satellite to test an anti-satellite weapon. It generated the most space debris in history – over 3,000 pieces are still orbiting today.

This short clip shows the increase in space debris in orbit around Earth.

On several occasions, the International Space Station has had to maneuver to narrowly avoid being struck by debris from this test, including as recently as 2021.

Anti-Satellite Weapons

Why would China, or any other country, want to develop an anti-satellite weapon? Satellites provide significant benefits to militaries. They help with reconnaissance and intelligence, allow for the precise targeting and guidance of long-range munitions, support communication over large distances and supply weather data, to name just a few uses.

These advantages were showcased during the first Gulf War, often called the “first space war.” The United States used space technologies to quickly and decisively defeat the Iraqi military within weeks, and with far fewer casualties than expected. The Gulf War had a profound impact on Chinese military thinking, with analysts in the People’s Liberation Army recognizing the importance of space technologies in modern warfare.

Whereas the United States has been and remains highly dependent on space capabilities, China has historically been less dependent on them. This means that China has traditionally had far less to lose from striking satellites in orbit and comparatively more to gain from disabling an adversary’s satellites.

Since the 1990s, China has invested in technologies that can jam, disable or outright destroy another country’s satellites. This effort has been driven by a desire to counter what it sees as a key vulnerability of the U.S. military – its heavy reliance on space capabilities.

Yet much has changed since China’s first anti-satellite test in 2007.

China has gradually narrowed the gap with the United States in space capabilities and is now one of the most powerful spacefaring nations on Earth. As a result, China now has more at stake if it were to lose access to space.

Space debris is becoming a serious threat to Chinese interests in space. In 2022, for example, reports emerged that debris from Russia’s 2021 ASAT test came dangerously close to a Chinese satellite. Similarly, in 2021 China filed a claim at the United Nations that China’s Tiangong space station had to perform avoidance maneuvers due to “close encounters” with Starlink satellites. And now, in November 2025, China’s Shenzhou-20 spacecraft has actually been struck by space debris.

Recognizing the Problem

It is too early to gauge how seriously Chinese officials view the threat of space debris. However, the high-profile nature of this recent incident may alert China’s public and officials to the risks posed by space debris.

China’s space station, its astronauts and its satellites are important to the Chinese Communist Party. If space debris permanently destroyed parts or all of China’s space station, or even killed a Chinese astronaut, it would likely lead to significant public outcry.

China’s space station is a project over three decades in the making and is the crown jewel of its space program. The Tiangong is set to become the only space station in orbit if the United States proceeds with its plans to deorbit the ISS in 2030.

A space station, which looks like several connected cylinders with solar panels coming off them, orbiting the planet Earth.

An illustration of China’s Tiangong space station. alejomiranda/iStock via Getty Images

Just as an owner of an expensive Lamborghini may become increasingly worried about dangerous road conditions that may damage their prized possession, Chinese officials may become anxious about China’s ability to operate its space station should space junk continue to clutter low Earth orbit.

Even if space debris does not damage China’s space station, it still poses a risk to Chinese satellites. And low Earth orbit is likely to become only more crowded, as SpaceX has announced plans to add up to 40,000 Starlink satellites in orbit, and China plans to add tens of thousands more satellites in low Earth orbit through its Guowang and Qianfan satellite megaconstellations.

China’s growing vulnerability to space debris creates an area of mutual concern where the United States and China may be able to work together to avoid future accidents.

Three astronauts walking down a street lined with crowds in stands waving Chinese flags.

China’s human spaceflight program is a point of national pride. Greg Baker/AFP via Getty Images

Risk-reduction measures could include the two countries notifying each other about potential collisions. China and the United States could also open discussions around how to safely operate satellites or remove them from orbit when they’re no longer useful.

It remains to be seen what lessons Chinese decision-makers draw from this recent episode. But the problem of space debris is not going away.The Conversation

 

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 
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, assistant professor of international affairs, Georgia Institute of Technology

Georgia Institute of Technology Media Contact
Shelley Wunder-Smith, shelley.wunder-smith@research.gatech.edu 

A 30-Year “Snapshot” of Pacific Northwestern Birds Shows Their Surprising Resilience

The Canada Jay is one of the birds struggling in the Pacific Northwest. (Credit: Mason Maron)

The Canada Jay is one of the birds struggling in the Pacific Northwest. (Credit: Mason Maron)

A 30-year “snapshot study” of birds in the Pacific Northwest is showing their surprising resilience in the face of climate change. The project started when School of Biological Sciences Assistant Professor Benjamin Freeman found a study by Louise Waterhouse detailing birds in the mountains near Vancouver three decades ago. What followed was an ecological scavenger hunt: Freeman revisited each of the old field sites, navigating using his local knowledge and Waterhouse’s hand-drawn maps.

Freeman, who grew up in Seattle, mainly studies the ecology of tropical birds — but the discovery of Waterhouse’s paper made him curious about research closer to home. The results were surprising: over the last three decades, most of the bird populations in the region were stable and had been increasing in abundance at higher elevations.

The study, “Pacific Northwest birds have shifted their abundances upslope in response to 30 years of warming temperatures” was published in the journal Ecology this fall. In addition to lead author Freeman, the team also included Harold Eyster (The Nature Conservancy), Julian Heavyside (University of British Columbia), Daniel Yip (Canadian Wildlife Service), Monica Mather (British Columbia Ministry of Water, Lands and Resource Stewardship), and Waterhouse (British Columbia Ministry of Forests, Coast Area Research).

“It is great news that most birds in the region are resilient, and by doing this work, we can focus on the species that do need help, like the Canada Jay, which is struggling in this region,” Freeman says. “Studies like this help us focus resources and effort.”

Songbirds and snow

Conducting the fieldwork was a detective game, Freeman says. Each day, he would wake up at four in the morning to locate and visit the research areas — often navigating trails, open forest, and rough terrain on foot.

This area of the Pacific Northwest is punctuated with old-growth stands of trees — sections of forest that have never been logged or altered. “These areas feel like islands,” Freeman shares. “They feel ancient and untouched, but even in pristine habitats, birds are still responding to climate change.”

Most of the work was conducted during the birds’ breeding season, from late May into June. This is when the birds are most vocal, which is ideal for surveys, Freeman says. The downside? Even in June, there is often snow in the mountains. “I was out at dawn, hiking through snow in the freezing cold, wondering why I didn’t stay in bed,” he recalls. “But then I’d hear birds singing all around me and realize it was all worth it.”

Upward expansion — and resilience

By comparing the two “snapshots,” the team showed that while temperatures have increased over the last 30 years, most bird populations in the region haven’t declined — but they have become more abundant at higher elevations. “It’s encouraging,” Freeman says. “Thirty years of warming has led to changes, but for the most part, these bird populations are mostly stable or improving.”

One reason for this resilience could be the stability that old growth forests provide, and Freeman suggests that conserving wide swaths of mountain habitat might help birds thrive as they continue to adapt, while still supporting populations at lower elevations. The study also helps identify which bird species need additional support, like the Canada Jay — a gray and white bird known for following hikers in pursuit of dropped snacks.

It’s just one piece of Freeman’s larger research goal — he aims to do this type of snapshot research in many different places to identify general patterns, especially differences in temperate versus tropical environments.

“In the tropics, most bird species are vulnerable, with only a few resilient species. In the Pacific Northwest, we saw the opposite,” he says. “A pattern is emerging: temperate zones show more resilience, tropics more vulnerability.” 

Freeman is also conducting research with a group of students in Northern Georgia. “We predict that these Appalachian birds will be resilient as well,” he says, “but we need to study and understand what’s happening in nature — not just make predictions.”

 

DOI: https://doi.org/10.1002/ecy.70193

Funding: Packard Foundation

A placard still standing from the original surveys conducted in the early 90's. Finding these original sites was a "scavenger hunt," Freeman says. (Credit: Benjamin Freeman)

A placard still standing from the original surveys conducted in the early 90's. Finding these original sites was a "scavenger hunt," Freeman says. (Credit: Benjamin Freeman)

A large downed cedar tree in one of the lowland old-growth forests that Freeman navigated. (Credit: Benjamin Freeman)

A large downed cedar tree in one of the lowland old-growth forests that Freeman navigated. (Credit: Benjamin Freeman)

Townsend's Warbler, a small songbird that lives in the forests of the Pacific Northwest. (Credit: Melissa Hafting, @bcbirdergirl)

Townsend's Warbler, a small songbird that lives in the forests of the Pacific Northwest. (Credit: Melissa Hafting, @bcbirdergirl)

While locating the field sites, Freeman spotted this bear on an old road. (Credit: Benjamin Freeman)

While locating the field sites, Freeman spotted this bear on an old road. (Credit: Benjamin Freeman)

An overgrown and abandoned road that Freeman traversed. (Credit: Benjamin Freeman)

An overgrown and abandoned road that Freeman traversed. (Credit: Benjamin Freeman)

The Varied Thrush is another bird common in the Pacific Northwest. (Credit: Melissa Hafting, @bcbirdergirl)

The Varied Thrush is another bird common in the Pacific Northwest. (Credit: Melissa Hafting, @bcbirdergirl)

 
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Written by Selena Langner

A Changing Reporting Landscape at the Intersection of Accounting and Cryptocurrency

Robbie Moon, associate professor of Accounting

Robbie Moon, associate professor of Accounting

Cryptocurrency continues to reshape the financial landscape. As cryptocurrency moves from niche to mainstream, companies are grappling with how to account for these volatile digital assets. New research from Scheller College of Business accounting professor Robbie Moon, and his co-authors Chelsea M. AndersonVivian W. Fang, and Jonathan E. Shipman, sheds light on how U.S. public companies have navigated crypto holdings and accounting practices over the past decade.
 

ASU 2023-08, the Financial Accounting Standards Board’s (FASB) newly enacted rule, aims to bring clarity and consistency to crypto asset reporting with the mandate for fair value reporting. Moon’s research, which examined a comprehensive set of companies from 2013 to 2022, looks at the exponential rise in corporate crypto investments and the diverse, and often inconsistent, ways firms have reported them.

In “Accounting for Cryptocurrencies,” Moon and his co-authors work to better understand this pivotal point in financial reporting with research that dives into why firms hold crypto – whether for mining, payment acceptance, or investment – and how reporting practices have evolved to meet this current moment.

Keep reading to learn more about Moon’s research and why it matters right now.

Why do companies hold cryptocurrencies, and how has this changed over time?

Companies hold cryptocurrency for three main reasons: they mine it, they accept it as payment, or they consider it an investment. Early on, most businesses kept crypto because customers used it to pay for goods and services. Around 2017, that trend declined, and more companies began mining crypto themselves. Today, mining accounts for about half of corporate crypto holdings, while payment acceptance and investment make up the rest.

What were the main challenges companies face when trying to report cryptocurrency holdings in their financial statements?

Until the end of 2023, there were no official rules on how companies should report cryptocurrency on their financial statements. Back in 2018, the Big Four accounting firms (Deloitte, PwC, EY, and KPMG) stepped in with guidance, suggesting that crypto be treated like intangible assets, similar to things like patents or trademarks. This is known as the impairment model.

What is the difference between the “fair value model” and the “impairment model” for accounting crypto assets, and why does it matter?

The two accounting methods differ in how they handle changes in crypto value. The fair value model updates the value of a company’s crypto to match current market prices every reporting period. If the price goes up or down, the change shows up on the company’s income statement as a gain or loss.

The impairment model only lets companies record losses when the value drops below what they paid. If the price goes up, they can’t record the increase.

The difference in the two approaches can best be seen when crypto prices rise. Under the impairment model, companies’ balance sheets understate the true value of the crypto since the gains cannot be recorded. The fair value model allows companies to adjust the balance sheet value of crypto as market prices change.

What factors led ASU 2023-08 to favor fair value reporting?

When the FASB was trying to decide if they should add crypto accounting to their standard setting agenda, they reached out to the public for feedback. The response was overwhelming and most practitioners and firms called for the use of the fair value model. 

How do big accounting firms, like Deloitte or PwC, influence how companies report their crypto holdings?

When there aren’t official rules for complex issues like crypto accounting, the Big Four firms often step in to guide companies. In 2018, they recommended using the impairment model, which they viewed as most appropriate based on existing standards. After that, most companies switched from fair value reporting to the impairment approach.

Their guidance in 2018 was based on what was allowed under the standards at that time. With the new rule in place, the firms will likely help clients manage the transition.

Does using fair value accounting for crypto make a company’s stock price more volatile or its earnings reports more useful to investors?

The primary downside of using a fair value model for a risky asset like crypto is how volatility affects earnings.  Moon’s research suggests that stock price volatility increases for firms using the fair value model, and it doesn’t appear the model makes earnings more useful for investors. That said, the results should be viewed cautiously because the study’s sample largely consisted of smaller companies.

Why does this research matter right now?

This research matters because more companies are investing in cryptocurrency. That trend is only expected to grow. This research looks at how businesses handled crypto before official rules came out in 2023, showing that many treated it like traditional investments. This provides a baseline against which future research can evaluate the new rule. The research also warns that the fair value approach could make stock prices more volatile without necessarily making earnings reports more useful for investors.
 
Read More: Accounting for Cryptocurrencies

 
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Kristin Lowe

kristin.lowe@scheller.gatech.edu