# Accounting

This section describes the accounting framework used by the hBTC vault, including NAV calculation, income recognition, and compounding mechanics.

#### Share Price Updates

The vault performs **daily accrual and valuation**, with rewards logged once per day.

At each daily valuation:

* All assets and liabilities are marked to market
* Accrued strategy income and financing costs are recognized
* Net assets are recalculated
* Rewards are logged 
* The hBTC share price updates accordingly

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Daily NAV movements **may be positive or negative** depending on market conditions and strategy performance.
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#### BTC Denomination

Strategy profits typically accrue in stablecoins within the vault as a result of borrowing and yield generation. However, all performance is accounted for and delivered in Bitcoin terms.

To align realized income with BTC-denominated NAV reporting, the vault periodically converts stablecoin profits into Bitcoin (sBTC). This harvesting process is integrated into the protocol's [Delta Control framework](https://docs.hermetica.fi/hbtc/risk-controls#id-2-delta-control) and ensures that realized gains are reflected in BTC exposure.

#### Compounding and Reinvestment

All realized income is retained within the vault and **automatically reinvested**, resulting in continuous compounding. This reinvestment is reflected directly in the hBTC share price.