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Tesla Records $140m Loss on Bitcoin Investments in 2022

According to a Filing “with the United States Securities and Exchange Commission on Jan. 31, electric vehicle manufacturer Tesla disclosed that it had recorded a $204 million gross impairment loss during 2022 on its Bitcoin holdings. Simultaneously, Tesla recorded a gain of $64 million from converting BTC into fiat currency at various points during the year, resulting in a net loss of $140 million from its cryptocurrency trading activities.”

The filing further explained the impact of volatile crypto prices on Tesla’s bottom line:

“Digital assets are considered indefinite-lived intangible assets under applicable accounting rules. Accordingly, any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale. For any digital assets held now or in the future, these charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase.”

Tesla has let go of most of its BTC holdings in a matter of weeks. As of date, it holds bitcoins roughly $184 million in worth. Elon Musk’s tweets had been the driving factor behind an impulsion in the value of BTC. 

In February 2021, bitcoin’s price rose to nearly $48,000, a rise of 25% was recorded after Tesla announced to diversify its portfolio toward cryptocurrency. Then in March, it again jumped when Tesla announced that bitcoins would now be accepted for the purchase of its EVs. But all of this soon started collapsing a few months after when Tesla backed off its bitcoin adoption plans, citing climate change concerns. 

The UK Treasury reports bitcoin’s global mining energy to be equivalent to the country’s 39% of capacity. In November 2022, BTC’s price soared to $70,000, an all-time high, before crashing by over 50% when Tesla decided to liquidate its bitcoin holdings.

The policy was rejected just months later, as Musk quotes “the need for confirmation of reasonable (~50%) clean energy usage by [Bitcoin] miners with the positive future trend.” 

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