Tesla Inc. has reported a $64M profit from a recent Bitcoin sale, according to Form 10-Q filing with the US Securities and Exchange Commission (SEC).
In a letter to its shareholders, Tesla Inc. disclosed that it had sold almost 75 per cent of its Bitcoin holdings and realised cash worth $936 million in its balance sheet.
Tesla released its full Q2 2022 financial report, and outlined how it dealt with rising inflation, economic downturn, and a record lunge in the price of Bitcoin and other cryptocurrencies.
“In the first quarter of 2021, we invested an aggregate $1.5 billion in Bitcoin. As with any investment, similar to the way we manage fiat-based cash and cash-equivalent accounts, we may increase or decrease our holdings of digital assets at any time, based on the needs of the business and our view of the market and environmental conditions,” Tesla said in the 10-Q filing with the SEC.
Incidentally, digital assets are considered indefinite intangible assets under applicable accounting rules.
Tesla further said that any decrease in their fair values below their carrying values (for such assets at any time subsequent to their acquisition) will require them to recognise impairment charges, whereas they may make no upward revisions for any market price increases until a sale.
“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. For example, in the six month period ended June 30, 2022, we recorded $170 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,” Tesla said in the filing.
Tesla CEO Elon Musk has, however, said that they have not sold any Dogecoin. He said Tesla has only sold its Bitcoin, because they were concerned about the overall liquidity of the company given the covid-19-related shutdowns in China, according to various media reports.
Musk, however, emphasised that this should not be interpreted as a judgement on Bitcoin, adding that they are “very open to growing their Bitcoin holdings in future.”
Incidentally, Tesla Inc. has increased its capital spending plan by $1 billion, according to a regulatory filing the electric carmaker filed on Monday that also disclosed a second subpoena related to Musk’s go-private Tweets in 2018.