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Tesla reports Bitcoin impairment charge in Q4 2022

In this post:

  • Despite maintaining its Bitcoin holdings in the preceding quarter, Elon Musk’s electric vehicle enterprise observed a dip in the value of its investment.
  • An up-to-date analysis of Tesla’s financial records reveals that their bitcoin investments are worth $184 million.

On Wednesday, Tesla disclosed in its latest earnings report that it had not purchased or sold any Bitcoin during the fourth quarter of 2022. The electric car manufacturer still reported $34 million worth of impairment charges due to their Bitcoin holdings dropping to $184 million—down from Q3’s impressive figure of $218 million.

In accounting, an impairment charge entails a decrease in the value of an asset below its original cost or carrying amount. For Tesla’s Bitcoin holdings, this means that they still possess the same amount of BTC on their balance sheet; however, its market worth has fallen compared to what it was at the end of last quarter.

By the end of September 2022, Bitcoin had reached a high of almost $20,000 before dropping to below $16,000 by the end of the year, according to CoinGecko.

Tesla’s $1.5 billion Bitcoin investment and subsequent sales

In February 2021, Tesla established itself as a leader in the cryptocurrency space when it announced an impressive $1.5 billion investment in Bitcoin, which ultimately catalyzed the coin’s value to new all-time highs.

Tesla revealed in the first quarter of 2021 that it had sold 10% of its Bitcoin holdings, aiming to demonstrate the liquidity and value of holding Bitcoin instead of cash. Furthermore, Tesla also sold a much larger portion (75%) by the second quarter of 2022.

At the time, Tesla had sales worth $936 million from digital assets on its balance sheet. Elon Musk rationalized the sale of these assets by citing uncertainty surrounding Covid-19 lockdowns in China and a need to maximize company cash resources.

Even as the markets spiraled downwards, Tesla refused to part with its Bitcoin portfolio of 10,725 BTC. This puts them in fifth place when looking at public companies that hold Bitcoin on their balance sheets.

Microstrategy, led by Michael Saylor, remains one of the largest cryptocurrency holders in the world with 132,500 BTC, valued at more than $3 billion, according to Buybitcoinworldwide.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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