The manufacturer of electric vehicles made $64 million in profits from trading Bitcoin, but those profits were offset by a $204 million impairment.
Tesla, a maker of electric vehicles, stated in a filing with the US Securities and Exchange Commission on January 31 that it had suffered a $204 million gross loss on impairment of its Bitcoin holdings in 2022.
Tesla concurrently reported a gain of $64 million from changing BTC into fiat money at various intervals throughout the year, resulting in a net loss from cryptocurrency trading of $140 million.
In the filing, it was further highlighted how unpredictable cryptocurrency values affect 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 made a $1.5 billion Bitcoin investment in the first quarter of 2021. Elon Musk, the company’s founder, declared that the producer of electric vehicles would begin taking BTC payments from customers in the United States at that time.
Just a few months later, the policy was changed, with Musk stating that the company would only accept the payment method if it had “confirmed that acceptable (50%) clean energy usage by [Bitcoin] miners with good future trend.” Tesla reportedly sold 75% of its Bitcoin holdings in the second quarter of 2022.