‘I’m anxious’ – Bitcoin now poised for Tesla price bomb after Elon Musk reveals shock sell-off
Tesla revealed last week that it sold nearly $1 billion of the bitcoin it bought early last year, with Tesla CEO Elon Musk downplaying the move.
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Bitcoin prices managed to avoid a selloff following the news, in part due to Musk explaining that it was only to maximize Tesla’s cash position and uncertainty over ongoing China shutdowns.
Now the bitcoin and crypto markets are gearing up for Teslas
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Tesla billionaire Elon Musk helped the bitcoin price rise last year before revealing that Tesla has done so … [+]
“I’m excited to see the actual records — to see if they reveal the date they sold, the price they sold at,” said Aaron Jacob, head of accounting solutions at cryptocurrency software company TaxBit. Bloomberg. “They can’t divulge any of that.”
Tesla announced that it had sold about 75% of the $1.5 billion worth of bitcoin it bought over a year ago, adding $936 million in cash to its balance sheet even after an almighty bitcoin price crash that wiped out $2 trillion from the combined crypto market. The company recorded a “depreciation, amortization and impairment charge” of $922 million during the quarter.
“In short, analysts prepared for [around] $460 million in impairment losses,” Jacob said in an emailed statement.
“By selling, they book a realized loss that will be far less than that (because they probably sold before the bottom), but then have a cash event to strengthen their cash position. So it’s a cash event loss rather than a non-cash impairment. We have to see their report to be sure how they ordered it.”
Tesla’s 10-Q — a financial performance that typically includes more detail than a brief earnings report and must be filed about 40 days after an earnings report — could shed light on how bitcoin both helped and hurt Tesla’s balance sheet. Last year, Tesla’s 2021 second quarter 10-Q was filed on July 27.
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The price of Bitcoin has fallen sharply over the past year, sparking a broader crypto crash and foreshadowing … [+]
“Tesla’s disclosure is really vague and not transparent,” said Vivian Fang, an accounting professor at the University of Minnesota’s Carlson School of Management. Bloomberg. “It is very difficult to realize exactly what is the realized gain and what is the write-down.”
Despite the sale, Musk tried to reassure the bitcoin and crypto market, saying Tesla would be “open to increasing its bitcoin holdings in the future.”
“This shouldn’t be taken as a judgment on bitcoin,” Musk said, speaking about Tesla’s earnings, adding that Tesla hasn’t sold dogecoin, but cryptocurrency is “not something we think about a lot,” calling it “a sideshow to the sideshow”. .”
“The fundamental good thing about Tesla and the reason we’re doing this is to bring the day of sustainable energy sooner. That’s our goal. We’re neither here nor there on cryptocurrency.”
In June, Musk revealed that he still buys the joke bitcoin rival dogecoin and will continue to “support it”, after his rocket company SpaceX followed Tesla in adopting dogecoin payments, allowing customers to buy goods using dogecoin.
