BlocksInform
In a recent dry deposit, the electric vehicle manufacturer reported a loss of $140 million on its bitcoin net holdings.
Depreciation expenses lead to a loss of CTB.
The Elon Musk-led EV innovation company has disclosed to the U.S. Securities and Exchange Commission (SEC) that it had earned a $204 million gross impairment loss on its Bitcoin holdings across 2022. Depreciation refers to the decrease in the value of bitcoin as an asset due to fluctuating economic circumstances caused by the 2022 crypto winter.
The company also revealed that it had earned $64 million by exchanging BTCs for trust currencies at various times of the year, This resulted in a net loss of $140 million compared to its secured trading activities in 2022.
The report says,
“Digital assets are considered indefinite-lived intangible assets under applicable accounting rules. Accordingly, any decrease in the fair value of these assets that is less than our carrying amount at any time after they are acquired will require us to record impairment charges, whereas we cannot make any upward revision in price increases from the market to the 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.”
Musk, Tesla, And Bitcoin
According to the filings, Tesla reported that its aggregate Bitcoin investments in the first quarter of 2021 amounted to $1.5 billion. During that period, founder elon musk announced that the company would accept Bitcoin as a payment from its customers based in the United States. However, the payment method was stopped a few months later, with musk asserting the necessity for Bitcoin to adopt a clean energy use for any future pursuit of the payment policy.
The company had sold off 75% of its BTC holdings in the second quarter of 2022, citing liquidity concerns after the two-month-long shutdown of the Tesla Gigafactory in Shanghai due to Covid-19. The sell-off earned the company $936 million at the point of sale but actually cost the company a net loss of $106 million due to the drop in the value of the crypto.
Subsequently, the company no longer sold its BTOs. In its recently released earnings reports for the fourth and last quarter of 2022, it was revealed that Tesla had continued to hold on to its 9720 BTCs for the entire second half of the year.
