Not even Elon Musk is safe from the volatility that comes with investing in crypto.
In a regulatory filing, Tesla reported that it suffered a $170 million impairment loss on its investment in Bitcoin during the first 9 months of this year, noting that it had also gained roughly $64 million by converting some of the Bitcoin that it owned into fiat money, a government-issued currency that is not backed by a commodity like gold or silver.
The electric car company offloaded $936 million in Bitcoin during Q2 2022, something Musk reportedly ordered in an attempt to gain back cash due to pandemic-related profit and revenue losses in Tesla’s China market. Tesla originally invested $1.5 billion into BTC in January 2021.
Tesla still holds about $2.18 million in BTC per the company’s Q3 2022 earnings report.
“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,” Tesla said in Monday’s 10-Q filing.
“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,” they added.
The news comes as not a big surprise as the crypto world at large has taken a massive hit this year in what many have dubbed the “Crypto Winter.”
Bitcoin is down just under 68% in a one-year period and a 72% drop from its all-time high of $68,789.63 in November of last year, per most recent data on Monday.
Still, Tesla is coming off of a strong third quarter despite BTC losses, clocking in a net income of $3.33 billion, over double the amount at the same time last year.
During the Q3 call, Musk was asked if he would consider putting all of his companies — including Tesla and potentially Twitter — under one stock umbrella to create a super company of sorts.
“It’s not clear to me what the overlap is. It’s not zero, but it’s — I think we’re reaching. I’m not worried about it,” Musk said about the concept.
Tesla was down just over 40% in a one-year period as of Monday morning.
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