According to a report filed with the United States Securities and Exchange Commission (SEC) on Jan. 31, electric vehicle maker Tesla revealed that it recorded a gross impairment loss of $204 million during 2022 on its Bitcoin (BTC) holdings. . At the same time, Tesla recorded a $64 million gain from converting BTC into currency at various times of the year, resulting in a net loss of $140 million from its cryptocurrency trading activities.
The document further explained the impact of cryptocurrency price volatility on Tesla’s earnings:
“Digital assets are considered indefinite-lived intangible assets under applicable accounting standards. Consequently, any decrease in their fair values below our book values for such assets at any time after their acquisition will require us to recognize impairment charges, while we cannot make upward revisions for any increase in market prices until a sale.For any digital assets held now or in the future, these charges may adversely affect our profitability in periods when such impairments occur, even if the global market values of these assets rise.”
In the first quarter of 2021, Tesla invested $1.5 billion in Bitcoin. At that time, its founder, Elon Musk, announced that the electric vehicle maker would begin accepting BTC payments from US-based consumers.
The policy was retracted just a few months later, as Musk cited the need for “confirmation of reasonable use (~50%) of clean energy by miners.” [de Bitcoin] with a positive future trend”, before the company accepted the means of payment again. Tesla reportedly sold 75% of its BTC holdings in Q2 2022.
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