Tesla Reports $170 Million Loss on Its Bitcoin Holdings in 10-Q Filing
Tesla reported a $170 million loss on its Bitcoin (BTC) investment, according to a 10-Q filing published Monday. On the other hand, the automaker generated $64 million in gains “on certain conversions of bitcoin to fiat currency,” it added.
Tesla Hurt by Crypto Downturn
Tesla saw a loss of $170 million in the first nine months of 2022, the automaker said in a 10-Q filing Monday. The blow comes on the heels of a massive selloff in the broader cryptocurrency market, which wiped out the prices of Bitcoin and other cryptocurrencies. At the same time, the electric car maker earned $64 million from “certain conversions of bitcoin to fiat currency.”
“For any digital assets held now or in the future, these costs could adversely affect our profitability in the periods in which such declines occur, even if the aggregate market values of those assets increase.”
– Tesla wrote in a 10-Q file.
Tesla sold $936 million worth of Bitcoin, or 75% of its holdings, in Q2 2022. The world’s largest electric vehicle (EV) maker by market cap made no changes to its BTC holdings in Q3 2022 as the value of its digital assets stood on. to 218 million dollars, unchanged from the previous quarter.
“Digital assets are considered intangible assets with an indefinite life according to the current accounting rules. Accordingly, any reduction in their fair values below our book values for such assets at any time after their acquisition will require us to recognize write-downs, while we cannot make any upward adjustments for any market price increases prior to a sale.”
Join our Telegram group and never miss a story about digital values.
Tesla’s $1.5 billion investment in Bitcoin backfires
Tesla’s impairment loss came after the automaker invested $1.5 billion in Bitcoin in February 2021 to “diversify and maximize returns” on cash. But the blow shouldn’t come as a surprise given how “cold” the crypto winter is in 2022.
The market downturn sent crypto prices to multi-year lows, with Bitcoin and Ethereum losing 50% in value over the past 6 months. The world’s largest cryptocurrency is currently trading at $19,388, down more than 70% from its all-time high just one year ago.
Investors lost their appetite for risky assets as inflation continued to jump to new post-pandemic highs. The downturn also led to a sharp decline in other crypto-related markets such as non-fungible tokens (NFT), where sales fell nearly 70% in Q3 year-over-year.
Economy is changing.
Find out how, with Five Minute Finance.
A weekly newsletter covering the major trends in FinTech and decentralized finance.
Do you think Tesla will keep faith with its remaining holdings of digital assets despite the impairment loss? Let us know in the comments below.
About the author
Tim Fries is the co-founder of The Tokenist. He has a B. Sc. in mechanical engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate in the investment team at RW Baird’s US Private Equity division and is also a co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
