Tesla’s latest filing with the U.S. Securities and Exchange Commission (SEC) shows that the fair market value of the company’s bitcoin holdings was $191 million at the end of 2022. In addition, billionaire Elon Musk’s electric car company recorded $204 million of impairment losses resulting from changes in the prices of bitcoin.
Tesla’s Digital Assets and Its Bitcoin’s Fair Value
Elon Musk’s electric car company, Tesla (Nasdaq: TSLA), filed its annual report for the year ended Dec. 31, 2022, with the U.S. Securities and Exchange Commission (SEC) on Monday.
The filing shows that the fair market value of Tesla’s BTC holdings was $191 million at the end of 2022 while their carrying value was $184 million, as Bitcoin.com News previously reported. “As of December 31, 2022, and 2021, the carrying value of our digital assets held was $184 million and $1.26 billion, which reflects cumulative impairments of $204 million and $101 million, each period, respectively,” the company detailed, elaborating:
The fair market value of such digital assets held as of December 31, 2022 and 2021 was $191 million and $1.99 billion, respectively.
The filing also notes that during the two years ended Dec. 31, 2022, Tesla “purchased and/or received an immaterial amount and $1.50 billion, respectively, of digital assets.”
The electric car company invested $1.5 billion in bitcoin in Q1 2021 but sold 75% of its holdings in Q2 2022. The company also accepts the meme cryptocurrency dogecoin (DOGE) for some merchandise, which accounted for an “immaterial amount” of digital assets as stated in the SEC filing.
Tesla’s $204 Million in Impairment Losses From Bitcoin
The electric car company explained that digital assets are considered “indefinite-lived intangible assets under applicable accounting rules.” Therefore, “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,” Tesla described, adding:
In the year ended December 31, 2022, we recorded $204 million of impairment losses resulting from changes to the carrying value of our bitcoin and gains of $64 million on certain conversions of bitcoin into fiat currency by us.
Since its BTC acquisition, Tesla only sold its bitcoin once, which was in the second quarter of 2022. The company sold 75% of its bitcoin holdings which added $936 million in cash to its balance sheet. CEO Elon Musk explained at the time that the company is “certainly open to increasing our bitcoin holdings in [the] future,” noting that the sale was due to concerns about the company’s overall liquidity, “given Covid shutdowns in China.”
Tesla’s SEC filing also states:
We may increase or decrease our holdings of digital assets at any time based on the needs of the business and our view of market and environmental conditions.