Key Highlights
- Tesla announced that it had experienced a net loss of $140 million from its Bitcoin Holdings for 2022.
- The company had incurred a gross impairment loss of $204 million from its Bitcoin (BTC) holdings for 2022.
Tesla, an electric car manufacturer, reported on 31st January that it had incurred a gross impairment loss of $204 million from its Bitcoin (BTC) holdings for 2022, according to a filing submitted to the United States Securities and Exchange Commission. Tesla recorded a gain of $64 million from converting BTC into fiat currency at different periods during the year. It has experienced a net loss of $140 million from its Risk Of Crypto trading activities in 2022.
The filing further explained the impact that the fluctuation Risk Of Crypto values has on Tesla’s financial performance.
According to relevant accounting standards, digital assets are considered intangible assets with an indefinite life. If their value decreases below their carrying value, the company is required to recognize an impairment charge.
However, the company is not permitted to make any upward revisions for market price increases until the asset is sold. Despite an increase in the total market value of these assets, impairment charges may negatively affect Tesla’s profitability in the periods in which such impairments occur for any digital assets that are held now or in the future.
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Investment of Tesla In Bitcoin
Tesla invested $1.5 billion in Bitcoin in the first quarter of 2021, and soon after, Elon Musk announced that the company would accept Bitcoin payments from customers in the US. However, the decision was reversed a few months later due to Musk’s concern about the lack of confirmation of sufficient clean energy consumption by Bitcoin miners with the favorable future trend. Recent reports indicate that Tesla sold off approximately 75% of its Bitcoin holdings in the second quarter of 2022.
