Tesla’s Bitcoin holdings lead to £141.5m impairment charge and £53.3m profit

Tesla had an impairment charge of $170m (£141.5m) on the carrying value of its Bitcoin holdings, while making a $64m (£53.3m) profit from selling the cryptocurrency in the first half of 2022, the company reported.

In a filing with the Securities and Exchange Commission on Monday, the electric automaker said that it must recognise impairment charges from any decrease in the fair values of digital assets below Tesla’s carrying values for them after they have been acquired . It cited accounting rules which consider digital assets to be indefinite-lived intangible assets.

Tesla said no upward revisions may be made for market price increases until a sale. “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,” the company said in the filing.

Tesla similarly reported a gain of $128m (£106.5m) from selling digital assets in the first half of 2021, as well as a $73m (£60.8m) impairment loss on digital assets. It bought $1.5bn (£1.25bn) worth of Bitcoin in early 2021.

“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,” the company said.

Tesla sold 75 per cent of its Bitcoin portfolio for $936m (£782m) and had digital asset holdings of $218m (£182.4m) in the second quarter of 2022, it announced in its Q2 earnings report last week.

Tesla CEO Elon Musk, the world’s richest man, has been an outspoken advocate for cryptocurrencies like Bitcoin and Dogecoin.

Tesla did not immediately respond to City PM’s request for comment.