Tesla Records $170 Million Impairment Charge on Bitcoin
25 July 2022 - 9:20PM
Dow Jones News
By Will Feuer
Tesla Inc. said it recorded a $170 million impairment charge
against the carrying value of its bitcoin holdings for the first
six months of the year, as well as gains of $64 million from
certain sales of its bitcoin holdings.
Because accounting rules define digital assets as
indefinite-lived intangible assets, Tesla said that it must
recognize impairment charges to reflect any decrease in the fair
value of cryptocurrencies held by the company below their carrying
values.
"We may make no upward revisions for any market price increases
until a sale," the company said in a securities filing. "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."
Last week, Tesla Chief Executive Elon Musk said the company sold
$936 million worth of bitcoin in the second quarter to maximize its
cash position as it dealt with the closure of its Shanghai factory
due to local Covid-19 lockdowns. The company has unloaded around
75% of its $1.5 billion initial position in the cryptocurrency,
leaving it with about $218 million worth of digital assets as of
the end of June.
Mr. Musk has been a vocal commentator on digital currencies.
Tesla briefly accepted bitcoin as payment for its vehicles but
suspended that policy in May 2021, citing concerns about the use of
fossil fuels to mine bitcoin. Mr. Musk said at the time that Tesla
wouldn't sell any bitcoin.
Write to Will Feuer at Will.Feuer@wsj.com
(END) Dow Jones Newswires
July 25, 2022 07:05 ET (11:05 GMT)
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