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Tesla still holds Bitcoin, but also took a $200 million loss because of it

Tesla confirmed that it still holds Bitcoin, but it sold a lot of them and took a $200 million loss because of the cryptocurrency.

Early in 2021, Tesla invested $1.5 billion in Bitcoin. Shortly after, the automaker started accepting the cryptocurrency as payment on new vehicles.

However, a few days later, Tesla took a step back with crypto by removing the Bitcoin payment option. The company noted concerns over the energy needs of the Bitcoin network:

Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.

This is a concern that many Tesla community members shared when Tesla first announced its Bitcoin investment, and many were angered by the fact that the company didn’t think about it in the first place.

At the time, Tesla noted that it was not selling its stake in Bitcoin and that it planned to resume taking Bitcoin payments once the network showed a higher mix of renewable energy.

A year after the initial investment, Tesla’s Bitcoin holding increased to $2 billion.

Top comment by Damion Berger

Liked by 7 people

Tesla’s Bitcoin ‘loss’ isn’t quite what it appears. As I understand it, accounting rules require the recording of an impairment loss equal to the lowest market value of the Bitcoin during the quarter. So if by the end of Q4 the price was $23k, but at some point in the quarter it hit a low of $16.5k, then they have to mark to the market the value of their Bitcoin at the lowest price it hit during the quarter.

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The cryptocurrency has since lost much of its value and the automaker’s position suffered greatly, but Tesla also sold gradually throughout the drop – avoiding a lot of the downturn.

With the release of its 10-K annual financial filing with the SEC today, Tesla has released more details about what it has referred to as a “restructuring of its digital assets.”

The company wrote in the filing:

During the years ended December 31, 2022 and 2021, we purchased and/or received an immaterial amount and $1.50 billion, respectively, of digital assets. As of December 31, 2022, we have converted approximately 75% of our purchases into fiat currency. During the years ended December 31, 2022 and 2021, we recorded $204 million and $101 million of impairment losses on such digital assets, respectively. During the years ended December 31, 2022 and 2021, we realized gains of $64 million and $128 million, respectively, in connection with converting our holdings of digital assets into fiat currency. The gains are presented net of impairment losses in Restructuring and other in the consolidated statements of operations. As of December 31, 2022 and 2021, the carrying value of our digital assets held was $184 million and $1.26 billion, which reflects cumulative impairments of $204 million and $101 million, each period, respectively. The fair market value of such digital assets held as of December 31, 2022 and 2021 was $191 million and $1.99 billion, respectively.

In short, Tesla sold most of its Bitcoin in 2022, but it still holds about $184 million worth of Bitcoin while taking an impairment loss of $204 million in 2022.

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