Tesla Records $140M Bitcoin Loss in 2022: Musk’s Crypto Gamble
• Tesla recorded a $204-million gross impairment loss and a $64 million gain from converting BTC into fiat currency in 2022, resulting in a net loss of $140 million.
• In the first quarter of 2021, Tesla invested $1.5 billion in Bitcoin and announced that it would start accepting BTC payments from U.S.-based consumers.
• Later, the policy was retracted due to concerns about Bitcoin’s energy consumption and environmental impact.
Tesla Records Net Loss on Bitcoin
Tesla reported a net loss of $140 million on its cryptocurrency trading activities for the year 2022. This was due to a gross impairment loss of $204 million being offset by a gain of $64 million from converting Bitcoin (BTC) into fiat currency at various points throughout the year.
Tesla’s Investment in Bitcoin
In the first quarter of 2021, Tesla made an investment of $1.5 billion in Bitcoin and announced that it would accept BTC payments from U.S.-based customers. However, this policy was later retracted due to concerns about the cryptocurrency’s energy consumption and environmental impact.
Accounting Rules for Digital Assets
As digital assets are classified as indefinite-lived intangible assets under applicable accounting rules, any decrease in their fair values below carrying values will result in impairment charges being recognized by Tesla which could have negative impacts on its profitability even if overall market values increase.
Impact on Profitability
The recording of such losses may have an adverse effect on Tesla’s profitability as any market price decreases below carrying values require recognition of an impairment charge regardless if overall market prices increase or not afterwards.
Elon Musk’s Viewpoint
Elon Musk has previously spoken out about his views on cryptocurrencies such as Dogecoin (DOGE) which he has described as „a hustle“ during an appearance on Saturday Night Live (SNL). His opinion towards cryptos appears to be more positive when taking into account his investment decisions with regards to Bitcoin; however, he does emphasize caution when trading digital assets online due to their volatile nature and risk associated with them.