Electric vehicle company Tesla revealed that it has incurred a $204 million gross impairment loss on its Bitcoin assets during 2022 in a report with the United States Securities and Exchange Commission (SEC) on January 31.
Tesla also reported a gain of $64 million from changing BTC into fiat money at different points throughout the year, which resulted in a net loss from its trading activities of $140 million. The document went into more detail about how Tesla’s revenue is impacted by fluctuating cryptocurrency values.
It states that “digital assets are considered indefinite-lived intangible assets under applicable accounting rules. Accordingly, any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale.”
Moreover, Tesla stated in the document that “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 didn’t Sell any Crypto in Q4 2022
The news comes after Elon Musk, the CEO of Tesla, disclosed the company’s fourth-quarter results report, which states that the company’s Bitcoin holdings have not altered and that it still had $184 million in total of the cryptocurrency on hand.
Tesla reported that, for the second straight quarter, despite market volatility, it did not buy or sell any bitcoin in its Q4 results announcement on Jan. 25.
However, the company sold out 75% of its entire bitcoin (BTC) assets, totaling up to $936 million, in July last year. It sold off its Bitcoin holdings for the second time during the selloff.
The first instance occurred in Q2 2021, when 10% of the company’s assets were sold off in response to a substantial rise in the price of bitcoin.