Tesla Hit With $34m Impairment Charge on the Bitcoin it Holds on its Balance Sheet

Leading electric vehicle maker Tesla has revealed that it did not sell any Bitcoin during the fourth quarter of 2023. The company currently holds 10,725 BTC. However, the EV maker’s Bitcoin holdings have taken a hit, with the value dropping to $184 million by the end of the last quarter of 2022.

Tesla did not sell any Bitcoin in Q4 2022 despite price dip

Tesla’s Bitcoin holdings during the third quarter of 2022 were worth $218 million. However, this value dropped significantly to $184 million by the end of Q4, with the EV maker reporting an impairment charge of $34 million.

The impairment charge resulted from Bitcoin’s volatile price movements in Q4 2022. After the FTX exchange filed for bankruptcy in early November, Bitcoin recorded a steep decline, with the price dropping below $16K. The collapse of FTX, once one of the largest cryptocurrency exchanges, led to dips across the entire crypto market.

However, since the start of 2023, Bitcoin and the entire cryptocurrency market have reported a healthy recovery. Bitcoin has gained by around 35% over the past month, indicating that Tesla’s financial results for the first quarter of 2023 will be different if the coin continues to recover.

At the time of writing, Bitcoin was trading at $22,958, which means that Tesla’s BTC holdings are already up from what they were worth in the last quarter.

Tesla’s Bitcoin journey

Tesla’s Bitcoin journey has largely been attributed to the company’s CEO, Elon Musk, a crypto advocate. The EV maker is among the few public companies in the US that hold Bitcoin on their balance sheet.

Tesla first gained exposure to Bitcoin in 2021. At the time, the EV maker revealed it made a $1.5 billion investment in the coin, which triggered BTC’s rally to all-time highs. During the same period, Musk was also promoting Dogecoin, the largest meme coin whose price grew to record highs.

However, in May, Musk announced that Tesla would no longer invest in Bitcoin because of the environmental concerns around Bitcoin mining. Tesla first sold Bitcoin during the first quarter of 2021. At the time, the company said that the objective was to prove that holding Bitcoin in a company’s balance sheet offered the same liquidity as holding cash.

The second time that Tesla sold Bitcoin was during the second quarter of 2022. The company sold 75% of its Bitcoin holdings at the time. Musk noted that the sale was necessitated by the business climate triggered by COVID lockdowns in China and a need for liquidity.

In its Q2 2022 earnings report, Tesla reported that the sale had generated $936 million. While Tesla is one of the largest companies holding Bitcoin, its stash is significantly lower than that of MicroStrategy. MicroStrategy has the highest Bitcoin holdings of any public company, with 132,500 BTC valued at more than $3 billion. The executive chairman of MicroStrategy, Michael Saylor, is a major Bitcoin bull.

Wall Street Memes (WSM) - Newest Meme Coin

Our Rating

Wall Street Memes
  • Community of 1 Million Followers
  • Experienced NFT Project Founders
  • Listed On OKX
  • Staking Rewards
Wall Street Memes