• Sun. Aug 14th, 2022

Tesla Records $170 Million Impairment Charge on Bitcoin

ByHazel R. Lang

Jul 25, 2022

By Will Feuer

 

Tesla Inc. said it recorded an impairment charge of $170 million on the book value of its bitcoin holdings for the first six months of the year, as well as gains of $64 million on certain sales of its holdings in bitcoin.

Because accounting rules define digital assets as intangible assets with indefinite lives, Tesla said it had to record impairment charges to reflect any decrease in the fair value of cryptocurrencies held by the company below. of their book value.

“We cannot make any upward revisions for any increase in market prices until a sale,” the company said in a securities filing. “These charges may negatively impact our profitability during periods in which such impairments occur, even if the overall market value of these assets increases.”

Last week, Tesla Chief Executive Elon Musk said the company sold $936 million worth of bitcoins in the second quarter to maximize its cash position as it faced the closure of its factory in Shanghai due to local Covid-19 lockdowns. The company unloaded around 75% of its initial $1.5 billion position in the cryptocurrency, leaving it with around $218 million in digital assets at the end of June.

Mr. Musk has been a vocal commentator on digital currencies. Tesla briefly accepted bitcoin as payment for its vehicles, but suspended that policy in May 2021, citing concerns about using fossil fuels to mine bitcoin. Mr. Musk said at the time that Tesla would not sell any bitcoin.

 

Write to Will Feuer at Will.Feuer@wsj.com

 

(END) Dow Jones Newswire

July 25, 2022 07:05 ET (11:05 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.


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