According to a filing made on Monday with the US Securities and Exchange Commission (SEC), Tesla suffered losses of $140 million last year on its Bitcoin bet.
Converting bitcoin last year had seen the electric car manufacturer record profits of $64 million, but it had also suffered an impairment charge of about $204 million.
The filing
Tesla revealed in the filing that they had converted Bitcoin into fiat currency, which had seen the company record gains of $64 million.
However, it also said that changes to the carrying value of BTC had seen an impairment loss of $204 million in the year.
An impairment charge refers to the loss or reduction in an asset’s value. Changing economic circumstances often lead to this situation, such as the crypto winter, which began in May 2022 after Terra’s collapse.
Less than a week before the annual SEC disclosure, Tesla released its earnings report for the fourth quarter.
The report did not include any Bitcoin transactions but did show a decline in the value of the company’s Bitcoin holdings, which lost $43 million in the last four months of the year.
Bitcoin investments
Tesla had become one of the largest corporate holders of Bitcoin in February 2021, second place to MicroStrategy, when it had bought $1.5 billion worth of the cryptocurrency.
Back then, Bitcoin had been trading at a price of $46,364 and in November 2021, the crypto climbed to its all-time high value of $69,044.
However, Bitcoin’s good times did not last for very long and neither did they for the crypto market in general, which went into freefall in the previous year.
As of January 31st, 2023, the price of Bitcoin has dropped to $23,051. The impairment losses for Tesla have doubled since 2021.
In that year, Tesla reported in an SEC filing that its impairment losses stood at $101 million on digital assets and its gains had been $128 million after it had sold bitcoin.
The company informed investors in October 2022 that it had sold 75% of its Bitcoin holdings back in July, which was valued at $936 million, but it still had about $218 million worth of the token.
More details
In Monday’s filing, Tesla said that similar to other investments, they can increase or decrease their digital assets’ holdings at any time, depending on the business’s needs and in accordance with environmental conditions.
The company also added in the filing that they review the intangible assets periodically to determine if their value on the balance sheet is not more than their fair market value.
Tesla also added that the impairment charge could also have an impact on its future bitcoin investments.
It said that their profitability could take a hit because of such charges, even if the market value of the assets rise during this time.
No specific digital asset was identified in the SEC filing, or the quarterly report of the company, other than Bitcoin.
But, it is believed that Tesla may hold Dogecoin, given that it accepts DOGE payments.
