In an earnings report after market close on Monday, Elon Musk’s electric car manufacturer revealed blockbuster income for the second quarter. The report showed that the firm produced and delivered 200,000 vehicles, accruing a profit of over $1 billion for the first time in history.
However, Tesla also indicated that bitcoin had put a slight dent in its earnings. The report specifically notes a bitcoin-related impairment loss of $23 million. This is way less than the $100 million impairment that some analysts had forecasted.
Tesla records a $23M #bitcoin-related impairment charge in Q2
(Companies get hit with these accounting charges if value of crypto falls below the price where they bought)
Not nearly as high as some expected.. was hearing estimates as high as $100M loss as btc fell below 30k
pic.twitter.com/nnQ32zNkdw
— Kate Rooney (@Kr00ney) July 26, 2021
In truth, because Tesla bought its $1.5 billion worth of bitcoin holdings in February when each coin was worth $32K, it’s still much ahead. This is, however, not how it works with corporate earnings reports. Since the electric car maker holds bitcoin as an “intangible asset”, it is obliged to book an impairment loss when the asset’s price falls below the cost basis, but it is not expected to report a profit if the price of bitcoin appreciates.
Tesla’s Q2 earnings span from March 1 to June 30. This is notably the period that saw erratic price action with the leading cryptocurrency dropping to $28K lows.
Tesla Still Owns $1.3 Billion Worth Of BTC
Despite Elon Musk’s deep concerns over bitcoin’s environmental impact which subsequently resulted in Tesla suspending BTC payments, the company has not liquidated more bitcoin.
The report on July 26 also pointed out that Tesla did not buy or sell any digital currencies in Q2. Thus, Tesla’s only crypto purchase remains its $1.5 billion bitcoin buy in Q1 — selling $273 million later in the quarter to test bitcoin’s liquidity.
During “The B Word” conference last Wednesday, Elon Musk swore his firm would not be selling its holdings in the near future, also hinting that it may soon restart BTC payments. The maverick CEO also revealed for the very first time that his space exploration and innovation company SpaceX also holds bitcoin on its balance sheet.
via ZyCrypto