Tesla’s decision to dump most of its Bitcoin (BTC) holdings brought the company a strong profit in the second quarter, even as cryptocurrency prices plunged into a bear market.
In the first six months of 2022, Tesla recorded $170 million of impairment losses “resulting from changes in the book value” of its Bitcoin holdings, according to an official Form 10-Q filed with the United States Securities and Exchange Commission, or SEC. After selling 75% of its BTC reserves for dollars in the second quarter, the company made a profit of $64 million.
In finance, an impairment loss occurs when the fair value of an asset held by a company falls below the book value of the investment.
If you sell 75% of your bitcoin, you will only have 25% of your #bitcoin left.
—Michael Saylor⚡️ (@saylor) July 20, 2022
Tesla posted an earnings per share of $2.27 in the second quarter on revenue of $16.93 billion. Although profitability was down compared to the first quarter, it was up from year-ago levels. Nevertheless, the company’s profitability was affected by rising inflation and growing competition for batteries.
The electric vehicle manufacturer still has 10,800 BTC on its books, according to Bitcoin Treasuries. At a current price of about $22,000 per BTC, Tesla’s digital asset holdings are worth about $237 million.
The 10-K disclosure revealed no new insights into Tesla’s digital asset strategy. However, the company stated that it can increase or decrease its holdings over time:
“As with any investment and consistent with how we manage fiat-based cash and cash equivalent accounts, we may increase or decrease our digital asset holdings at any time based on business needs and our vision for market and environmental conditions.”
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