Tesla misplaced over $140 million betting on Bitcoin final 12 months, in keeping with a Monday submitting with the U.S. Securities and Change Fee.
The electrical automotive producer took a $204 million impairment cost whereas gaining $64 million via changing Bitcoin in 2022.
“Within the 12 months ended December 31, 2022, we recorded $204 million of impairment losses ensuing from adjustments to the carrying worth of our Bitcoin and features of $64 million on sure conversions of bitcoin into fiat forex by us,” Tesla mentioned within the submitting.
An impairment cost describes a discount or loss within the worth of an asset.
It will probably happen due to a change in financial circumstances, just like the crypto winter that gripped the market after the collapse of Terra Luna in Might 2022.
The annual disclosure to the SEC comes lower than per week after Tesla’s quarterly earnings report, which included no Bitcoin transactions however nonetheless noticed the worth of its holdings decline, producing a $43 million loss for the final 4 months of 2022.
In February 2021, Tesla invested a staggering $1.5 billion in Bitcoin, making it one of many largest company holders of the cryptocurrency—second solely to MicroStrategy. On the time, Bitcoin traded at $46,364 per coin. By November 10, 2021, Bitcoin noticed its all-time excessive of $69,044 per coin, in keeping with CoinGecko.
However the good instances didn’t final as Bitcoin,
and the remainder of the cryptocurrency market, went into freefall in 2022. As of January 31, 2023, Bitcoin is buying and selling at round $23,051.
Tesla’s impairment losses almost doubled since 2021 when, in an SEC submitting that 12 months, Tesla reported a $101 million impairment loss on digital belongings and $128 million features after promoting Bitcoin in 2021.
By October 2022, Tesla reported to traders that the corporate nonetheless held over $218 million in Bitcoin after promoting 75% of its holdings in July—round $936 million on the time.
“As with every funding and according to how we handle fiat-based money and cash-equivalent accounts, we might enhance or lower our holdings of digital belongings at any time based mostly on the wants of the enterprise and our view of market and environmental situations,” the corporate mentioned in Monday’s submitting.
Within the submitting, Tesla calls its Bitcoin holdings indefinite-lived intangible belongings. These belongings are periodically reviewed to find out if their worth on the stability sheet exceeds their honest market worth. As Tesla defined, these impairment fees might have an effect on the corporate’s additional funding in Bitcoin.
“For any digital belongings held now or sooner or later, these fees might negatively impression our profitability within the durations wherein such impairments happen even when the general market values of those belongings enhance,” the corporate mentioned.