The electric car company’s Bitcoin losses have increased by twofold since 2021.
According to a filing made with the U.S. on Monday, Tesla lost over $140 million betting on Bitcoin last year. Securities and Exchange Commission The manufacturer of electric vehicles incurred an impairment charge of $204 million and recorded a gain of $64 million from the conversion of Bitcoin in 2022.
“In the year ended December 31, 2022, we recorded $204 million of impairment losses resulting from changes to the carrying value of our Bitcoin and gains of $64 million on certain conversions of bitcoin into fiat currency by us,” Tesla stated in the filing.
An impairment charge denotes a decline in an asset’s value. It can happen as a result of a change in economic conditions, such as the crypto winter that engulfed the market in May 2022 following Terra Luna’s failure.
Less than a week ago, Tesla reported its quarterly earnings. While there were no Bitcoin transactions reported, the value of Tesla’s holdings decreased, resulting in a $43 million loss for the last four months of 2022.
Tesla became one of the largest corporate holders of the cryptocurrency in February 2021 after making a mind-blowing $1.5 billion investment in Bitcoin, second only to MicroStrategy. At the time, the price of a single Bitcoin was $46,364. According to CoinGecko, Bitcoin reached an all-time high of $69,044 per coin on November 10, 2021.
The good times, however, were short-lived as in 2022, Bitcoin and the rest of the cryptocurrency market entered a free fall. Bitcoin’s price is currently $23,051 as of January 31st, 2023.
Tesla reported a $101 million impairment loss on digital assets and $128 million in gains after selling Bitcoin in 2021, in an SEC filing that year. Since then, Tesla’s impairment losses have nearly doubled.
Tesla reported to investors in October 2022 that the company still had over $218 million in Bitcoin after selling 75% of its holdings in July for a total of $936 million at the time.
“As with any investment and consistent with how we manage fiat-based cash and cash-equivalent accounts, we may increase or decrease our holdings of digital assets at any time based on the needs of the business and our view of market and environmental conditions,” the company said in Monday’s filing.
In the filing, Tesla refers to its Bitcoin holdings as indefinite-lived intangible assets. If the value of these assets on the balance sheet is higher than their fair market value, it will be examined from time to time. According to Tesla, the company’s potential future investment in Bitcoin may be impacted by these impairment charges.
“For any digital assets held now or in the future, these charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase,” the company said.
Apart from Bitcoin, no other specific digital assets were mentioned in either the SEC filing or the quarterly earnings report. But given that it accepts the meme currency as payment and that CEO Elon Musk is an avowed fan, it is thought that the company owns some Dogecoin.
Reference: https://decrypt.co/120313/tesla-details-140-million-bitcoin-loss-to-sec
