Tesla Q2 earnings: Elon Musk’s EV company books $23M in Bitcoin impairment; holds BTC worth $1.3 billion
Tesla, owned by Elon Musk, has reported $23 Million in impairment due to Bitcoin in its second-quarter operating income. This was in response to the drop in Bitcoin’s price to $30,000 in June.
According to Financial Express Online’s 10-K form, filed with the Securities and Exchange Commission (SEC), digital assets such as Bitcoin are classified under US accounting rules as “indefinite-lived tangible assets”. Tesla will have to report impairment if their fair value falls below Tesla’s digital currency asset values at any given time.
Also, this meant that Tesla wouldn’t make any upward revisions to its holdings even as Bitcoin prices rise unless it sells its Bitcoins. Tesla also noted that such an impairment could ‘adversely affect our operating results’ in its 10-K form.
Tesla’s investment in Bitcoin worth more than a billion dollars might have helped the $23 million loss. According to the company’s quarterly earnings presentation, its operating income jumped 31% to $1.3Billion from $327M in Q2 2020.
The company did not sell or buy Bitcoins during the quarter following its $1.5 billion purchase in Q1. In Q1, $272 million worth were sold. Current value of Bitcoins at the company was $1,311million or $1.3 billion.
Elon Musk had stated in May that the company would no longer accept Bitcoin payments from customers to purchase electric cars. This was due to concerns about the environment.
Musk spoke at the Bitcoin-focused conference B Word Wednesday and said that he would do more research on the amount of renewable energy used in mining Bitcoins.
Musk stated, Reuters quoted Musk as saying, “I wanted to do a little more due diligence to confirm the percentage of renewable energies usage is most likely at or over 50%, and that there’s a trend towards increasing it, and that Tesla would resume accepting Bitcoin if that happens.” Musk said, “Most likely the answer to that question is that Tesla will resume accepting bitcoin.” Musk had previously announced that it would accept Bitcoins to sell its electric cars back in March.