Tesla’s latest filing with the US Securities and Exchange Commission (SEC) shows that the fair market value of the company’s bitcoin holdings was $191 million at the end of 2022. Additionally, the company Billionaire Elon Musk’s electric cars recorded $204 million in impairment losses resulting from changes in bitcoin prices.
Tesla’s digital assets and the fair value of Bitcoin
Elon Musk’s electric car company Tesla (Nasdaq: TSLA) filed its annual report for the year ended December 31, 2022 with the US Securities and Exchange Commission (SEC) on Monday.
The filing shows that the fair market value of Tesla BTC holdings were $191 million at the end of 2022, while its book value was $184 million, as Bitcoin.com News previously reported. “As of December 31, 2022 and 2021, the book value of our digital assets held was $184 million and $1,260 million, which reflects accumulated impairments of $204 million and $101 million, each period, respectively”, detailed the company, preparing :
The fair market value of such digital assets held as of December 31, 2022 and 2021 was $191 million and $1.99 billion, respectively.
The filing also notes that during the two years ending December 31, 2022, Tesla “purchased and/or received an immaterial amount and $1.5 billion, respectively, of digital assets.”
The electric car company invested $1.5 billion in bitcoin in the first quarter of 2021, but sold 75% of its stake in the second quarter of 2022. The company also accepts the meme cryptocurrency dogecoin (DOGE) for some merchandise, which they represent an “immaterial quantity” of digital assets as stated in the SEC filing.
Tesla’s $204 Million in Bitcoin Impairment Losses
The electric car company explained that digital assets are considered “indefinite-lived intangible assets under applicable accounting standards.” Therefore, “any decrease in their fair values below our book values for such assets at any time after their acquisition will require us to recognize impairment charges,” Tesla described, adding:
In the year ended December 31, 2022, we recorded $204 million of impairment losses resulting from changes in the book value of our bitcoin and gains of $64 million on certain conversions of bitcoin to fiat currency by us.
From BTC acquisition, Tesla only sold its bitcoin once, which was in the second quarter of 2022. The company sold 75% of its bitcoin holdings, adding $936 million in cash to its balance sheet. CEO Elon Musk explained at the time that the company is “certainly open to increasing our bitcoin holdings in (the) future,” noting that the sale was due to concerns about the company’s overall liquidity, “given the closures of Covid in China”.
Tesla’s SEC filing also states:
We may increase or decrease our holdings of digital assets at any time based on business needs and our view of the market and environmental conditions.
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