Tesla details $140 million Bitcoin loss in SEC filing
by James · February 13, 2023
Tesla lost over $140 million betting on Bitcoin last year, according to a Monday report to the US Securities and Exchange Commission. The electric car maker took a $204 million write-down fee while getting $64 million by converting Bitcoin in 2022.
“In the year ended December 31, 2022, we recorded $204 million in impairment losses resulting from changes in the carrying value of our Bitcoin and gains of $64 million on certain conversions of bitcoin to fiat currency by us,” Tesla said in the archive.
An impairment describes a reduction or loss in the value of an asset. It can occur due to a change in economic conditions, such as the crypto winter that gripped the market after the collapse of Terra Luna in May 2022.
The annual disclosure to the SEC comes less than a week after Tesla’s quarterly earnings report, which did not include Bitcoin transactions but still saw the value of its holdings decline, generating a loss of $43 million for the final four months of 2022.
In February 2021, Tesla invested a staggering $1.5 billion in Bitcoin, making it one of the largest corporate owners of the cryptocurrency – second only to MicroStrategy. At the time, Bitcoin was trading at $46,364 per coin. By November 10, 2021, Bitcoin saw its all-time high of $69,044 per coin, according to CoinGecko.
But the good times didn’t last as Bitcoin, and the rest of the cryptocurrency market, went into freefall in 2022. As of January 31, 2023, Bitcoin is trading at around $23,051.
Tesla’s impairment losses nearly doubled since 2021, when in an SEC filing that year Tesla reported a $101 million loss on digital assets and $128 million in gains after selling Bitcoin in 2021.
In October 2022, Tesla reported to investors that the company still had over $218 million in Bitcoin after selling 75% of its stake in July – around $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 calls its Bitcoin holdings indefinite-lived intangible assets. These assets are assessed at regular intervals to determine whether the value on the balance sheet exceeds fair market value. As Tesla explained, these write-down costs could affect the company’s further investment in Bitcoin.
“For any digital assets held now or in the future, these costs may adversely affect our profitability in the periods in which such declines occur, even if the aggregate market values of those assets increase,” the company said.
Neither the quarterly earnings report nor the SEC filing identified any specific digital assets besides Bitcoin. The company is believed to hold Dogecoin, as it accepts the meme coin as payment, and CEO Elon Musk is a self-proclaimed fan.
