Tesla Bitcoin Impairment Loss In 2021 Crosses $100 Million Following Price Crash

Tesla remains 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 that it had no intentions of selling its holdings. This has however come at a price as the cryptocurrency had suffered various crashes and dip that 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 cryptocurrency markets as multiple bull rallies and subsequent crashes had rocked the space. Institutional investors had also piled into the market, making their stake known and making 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 case. In last year alone the company had seen its holdings almost double in value when bitcoin had rallied to its new high at $69k. Subsequently, bitcoin had lost a good chunk of its value, bringing the value 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.

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“We recorded approximately $101 million of impairment losses resulting from changes to the carrying value of our bitcoin and gains of $128 million on certain sales of bitcoin by us,” the report read.

This does not mean that the company lost $101 million though. Since they have not sold their bitcoins yet, this is basically an unrealized loss that Tesla is reporting. The company had previously stated that it plans to hold bitcoin on its balance sheet for the long-term and continues to do so.

BTC breaks below $44K | Source: BTCUSD on TradingView.com

Still In Profit

Tesla holds 48,000 bitcoin since 2021. The entry price for this BTC is $1.5 billion, at which the company had purchased its entire holdings. Given that these coins were purchased at a much lower price than the digital asset is currently trading for, Tesla still remains in profit to the tune of over $600 million, according to data from CoinGecko.

Related Reading | Why Tesla Invested $1.5 billion In Bitcoin Last Year

By the end of last year, at which the company had reported its impairment loss of $101 million, the company was still recording gains from its holdings, albeit to a lesser degree. Its BTC holdings had finished the year at a value 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 still holding on to its bitcoin, Tesla is yet to reinstate bitcoin payments. The company has shown that it is still open to crypto payments by accepting meme coin Dogecoin as payment for its merchandise but is yet to announce if it will resume accepting BTC payments for its electric vehicles.

Featured image from Financial Times, chart from TradingView.com

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