On the 30th of January, Tesla, a popular electric car manufacturer company, filed with the SEC, the US Securities and Exchange Commission. In the filing, Tesla revealed that it lost more than $140 million in betting on Bitcoin in 2022. According to the filing, in 2022, Tesla gained $64 million through converting Bitcoin but also took a $204 million impairment charge in this process.
In the filing, the electric car manufacturer wrote that on the 31st of December 2022, they recorded $204 million of impairment losses resulting from changes to the carrying value of their $64 million Bitcoin gains on some conversions of bitcoin into fiat currency by them. In Finance, an impairment charge describes a reduction in the value of an asset. This reduction could occur due to a change in economic circumstances, such as the crypto winter and the bear crypto market, which have been gripping the market since the Terra Luna collapse in May last year.
This latest annual disclosure of Tesla to the SEC came less than a week after the quarterly earnings report of the electric car manufacturer. This quarterly earning report included no Bitcoin, the largest cryptocurrency in the market, transactions, but despite this, there has been a decline in its holdings. According to the report, in the last four months of 2022, Tesla generated around $43 million loss.
In February 2021, Tesla invested around $1.5 billion in Bitcoin, which made the electric car manufacturer one of the largest corporate holders of BTC. At that time, Bitcoin was trading at around $46,364, and in November 2021, Bitcoin saw its all-time high of $69,044. However, in 2022, BTC and the rest of the crypto market went into freefall, and currently, BTC is trading at around $23,051. Due to this huge price decrease of the largest cryptocurrency, Tesla’s impairment losses nearly doubled.
In this latest filing from Tesla with the SEC, the electric car manufacturer said that as with any investment with how we manage fiat-based cash and cash-equivalent reserves, they could increase or decrease their holdings of digital assets at any time based on the requirements of the business and market conditions.