Tesla, the electric car manufacturer, has suffered losses of over $140 million after betting on Bitcoin. A Monday filing with the U.S. Securities and Exchange Commission showed the company took an impairment charge of $204 million, while gaining $64 million from converting Bitcoin. The company called its Bitcoin holdings “indefinite-lived intangible assets.” The losses come as a result of the crypto winter that swept the market following the collapse of Terra Luna in May 2022.
We recorded $204 million of impairment losses resulting from changes to the carrying value of our Bitcoin and gains of $64 million on certain conversions of bitcoin into fiat currency by us.
Tesla stated in the filing
In February 2021, Tesla invested $1.5 billion in Bitcoin, making it one of the largest corporate holders of the cryptocurrency. However, by November 2021, the value of its holdings had declined, leading to a loss of $43 million in the final quarter of 2022.
As with any investment and consistent with how we manage fiat-based cash and cash-equivalent accounts, we may increase or decrease our holdings of digital assets at any time based on the needs of the business and our view of market and environmental conditions.
Tesla’s impairment losses nearly doubled since 2021, when the company reported a $101 million impairment loss on digital assets and $128 million gains from selling Bitcoin. Despite the losses, the company still held over $218 million in Bitcoin by October 2022.
“For any digital assets held now or in the future, 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,” warned Tesla.
Although Tesla’s quarterly earnings report and SEC filing did not mention specific digital assets besides Bitcoin, it is believed the company holds Dogecoin as well, since it accepts the meme-coin as payment. CEO Elon Musk is a known fan of the cryptocurrency.