Elon Musk’s car manufacturer Tesla recorded a $170 million impairment charge for Bitcoin on its balance sheet during the first half of 2022. It also netted $64 million in gains from certain sales of the asset.
- The information comes attached to a 10-Q SEC filing from Monday. Tesla explained that it may make “no upward revisions” for subsequent Bitcoin price increases until it actually sells the asset.
- When accounting, digital assets are defined as “indefinite-lived intangible assets.” As such, Tesla must recognize any decreases to the value of Bitcoin during the reference period below its carrying value – even if its price rebounds in short order.
- Due to the high volatility of cryptocurrencies, this rule creates difficulty for companies seeking to hold such assets on their balance sheets. The Financial Accounting Services Board agreed to review the accounting rules pertaining to digital assets in May but is yet to hold a formal discussion on the matter.
- “These charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase,” said Tesla.
- Looming impairment costs were part of the reason Tesla opted to cash out its Bitcoin in Q2., leaving only 25% of its original position remaining.
- CEO Elon Musk later clarified that the selloff was related to his company’s need for cash, and not to his overall thesis on Bitcoin or crypto investing.
- As of July 2021, Musk said that he personally owns Bitcoin, with smaller allocations put towards Ethereum and Dogecoin.
- In Q1, Microstrategy recorded an equal $170 million impairment loss on its much larger Bitcoin position. Its Q2 loss figures are yet to be revealed.
SPECIAL OFFER (Sponsored)
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.
- AA News
- Bitcoin
- blockchain
- blockchain compliance
- blockchain conference
- coinbase
- coingenius
- Consensus
- crypto conference
- crypto mining
- Crypto News
- cryptocurrency
- CryptoPotato
- decentralized
- DeFi
- Digital Assets
- ethereum
- machine learning
- non fungible token
- plato
- plato ai
- Plato Data Intelligence
- Platoblockchain
- PlatoData
- platogaming
- Polygon
- proof of stake
- Tesla
- W3
- zephyrnet
More from CryptoPotato
$640 Million Liquidated Amid Binance-FTX Fiasco, FTT Drops Below $10
Source Node: 1749173
Time Stamp: Nov 8, 2022
Europe’s First Bitcoin Futures Product to Be Launched on Eurex
Source Node: 1043263
Time Stamp: Aug 25, 2021
DPE PairEx Announces Beta Trading Competition with Up to 8,888 USD ARB And PEX Tokens
Source Node: 2065716
Time Stamp: Apr 20, 2023
CBDCs Are Not That Stable And May Eventually Kill Bitcoin, Says Financial Expert
Source Node: 858541
Time Stamp: May 15, 2021
Another DeFi Hack: THORChain Compromised With up to $7.6M Stolen
Source Node: 982778
Time Stamp: Jul 16, 2021
Hacked C.R.E.A.M. Finance Promises to Repay Users With Protocol Fees and Offers 10% Bounty Bug
Source Node: 1052942
Time Stamp: Sep 1, 2021
Bank of Russia to Greenlight Cross-Border Payments With Crypto (Report)
Source Node: 1652680
Time Stamp: Sep 5, 2022
Here’s How Much BTC, ETH, and Stablecoins Are Held by North Korea’s Lazarus Group: Data
Source Node: 2291893
Time Stamp: Sep 25, 2023
MEHH Lunches Payment Solution To Simplify Digital Cryptocurrency Payments
Source Node: 1035583
Time Stamp: Aug 19, 2021
MetaMask Celebrates 10 Million Monthly Active Users: 1800% Yearly Growth
Source Node: 1054249
Time Stamp: Sep 1, 2021