CoinShots Logo
Tesla Loses $440m As Elon Musk's Bitcoin Bet Sours
Elon Musk’s Tesla is facing a $440m (£363.5m) writedown on its Bitcoin holdings after a spectacular slump in the digital currency’s value.
Muskaan T.
8:06 4th Jul, 2022
Markets

Tesla bought $1.5bn worth of Bitcoin early last year in a radical move that made it the biggest company to move part of its cash reserves into cryptocurrency.

But the carmaker’s bet has turned heavily lossmaking in recent months as Bitcoin crashes to an 18-month low.

On Thursday - the final day of Tesla’s second financial quarter - Bitcoin traded at around $19,000, making the company’s investment worth an estimated $820.8m.

The company recorded the value of its Bitcoin at $1.26bn three months ago. While the market value of the holdings was close to $2bn, accounting practices mean the company does not register gains on its investments until it sells.

This means Tesla is likely to record an impairment on its Bitcoin holdings of around $440m - equivalent to 9pc of its annual profit last year - when it reports quarterly results later this month.

The cryptocurrency’s price has fallen by 60pc from $46,700 at the start of the year and almost 75pc from an all time high in November. Rising interest rates and inflation have dulled interest in digital assets while prices have also been hit by a series of crises at cryptocurrency companies.

Tesla briefly accepted Bitcoin as a payment method last year but suspended its use after Mr Musk raised concerns about its carbon footprint. The world’s richest person said earlier this year that he had not personally sold any of his cryptocurrency investments.

A number of companies that have converted parts of their cash reserves to Bitcoin, such as Jack Dorsey’s Block, Coinbase and the software company MicroStrategy have suffered as the digital currency slumps. Around $1.3 trillion in total has been wiped off cryptocurrency markets this year.

Mr Musk has said Tesla needs to cut around 10pc of its salaried workforce as its newly opened factories in Berlin and Texas burn through huge sums of cash and the Tesla chief executive predicts an imminent US recession.

Source



CoinShots Logo

Social

Get in touch:

© 2022 Coinshots (AtlasZero LLC). All rights reserved.