Tesla, a maker of electric vehicles disclosed a loss on its net Bitcoin holdings of $140 million in a recent SEC filing. A gross loss of $204 million in Bitcoin assets has been reported to the U.S. Securities and Exchange Commission (sec) by innovation firm Ev Musk-led in 2022. The term “impairment loss” describes the decline in the asset value of Bitcoin as a result of the erratic economic conditions brought on by the 2022 crypto winter.
The company also revealed that it had earned $64 million by trading BTCs for trust currencies at different times of the year, Net loss in 2022 was $140 million.
The report claims,
“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.”
Tesla stated in its papers that it invested a total of $1.5 billion in Bitcoin during the first quarter of 2021. Elon musk, the company's founder, said the company is now going to accept Bitcoin from its American customers. A few months later, musk said that for the payment system to continue in the future, Bitcoin needs to shift to the use of clean energy.
In Q2 2022, The company sold 75% of its BTC holdings due to liquidity issues following the two-month outage at Shanghai's Tesla Gigafactory due to COVID-19.
The sale was worth $936 million to the company at the point of sale.
The decline in the value of cryptocurrency has resulted in a net business loss of $106 million. Subsequently, the business stopped selling its BTC.