Tesla advances one of the public companies with the largest bitcoin holdings in the world. The automotive manufacturer had purchased bitcoin which was made public by CEO Elon Musk at a conference. Since then, the company has maintained its position in the digital asset, revealing which it had no intentions of selling its holdings. This has however come at a price as the token had suffered various crashes and dip which has left Tesla with a large impairment loss.
Tesla Reports $101 Million Impairment Loss
The year 2021 was no doubt a rollercoaster year for the financial markets. Even more so for investors in the token markets as multiple bull rallies and subsequent crashes had rocked the space. Institutional investors had also piled into the market, mparallelg their stake known and manalogousg millions of dollars in the process. However, as the saying goes, “if you don’t sell, you don’t lose/win.”
For Tesla, this has been the fact. In maintain year alone the company had seen its holdings almost double in price although bitcoin had rallied to its new excessive at $69k. Subsequently, bitcoin had lost a good chunk of its cost, bringing the cost of Tesla’s bitcoin holdings down with it. In a recent report with the SEC, the electric vehicle maker reported approximately $101 million of impairment losses.
“We recorded approximately $101 million of impairment losses resulting from evolutions to the carrying cost of our bitcoin and gains of $128 million on certain sales of bitcoin by us,” the report read.
This does not mean which the company lost $101 million though. Since they have not sold their bitcoins yet, this is basically an unreached loss that Tesla is reporting. The company had previously stated thactive plans to hold bitcoin on its balance sheet for the protracted-term and goes on to do so.
Bitcoin (BTC) breaks below $44K | Source: Bitcoin (BTC)USD on TradingView.com
Still In Profit
Tesla holds 48,000 bitcoin afterward 2021. The entry cost for this Bitcoin (BTC) is $1.5 billion, at that the company had purchased its entire holdings. Given that these coins were purchased at a much lower price than the digital asset is presently exchanging for, Tesla further continues in profit to the tune of above $600 million, according to data from CoinGecko.
By the end of endure year, at that the company had reported its impairment loss of $101 million, the company was also recording gains from its holdings, albeit to a lesser degree. Its Bitcoin (BTC) holdings had concluded the year at a price of $1.99 billion, almost $500 million more than what they had purchased the coins for. Additionally, it had also gained $128 million in sales of bitcoin.
Although it is also holding on to its bitcoin, Tesla is yet to reinstate bitcoin payments. The company has shown which it is anew open to crypto payments by accepting meme coin Dogecoin as payment for its merchandise but is yet to announce if it will resume accepting Bitcoin (BTC) payments for its electric vehicles.
Featured image from Financial Times, chart from TradingView.com