Tesla Reveals $170 Million Bitcoin Loss, New Subpoena Linked to Musk 'Take Private' Tweets

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Updated at 9:39 am EST

Tesla  (TSLA) – Get Tesla Inc. Report said Monday that the fair value of its bitcoin holdings were pegged at around $220 billion last quarter after dumping more than 75% of its holdings amid what CEO Elon Musk described as ‘uncertainty’ linked to China’s Covid lockdowns. 

In a Securities and Exchange Commission filing published Monday, Tesla said the value of its digital assets — including bitcoin and dogecoin — were set at $222 billion as of June 30. Tesla took an impairment charge of $170 million on its bitcoin holdings for the first six months of the year, while recording a $64 million gain from converting its bitcoin into fiat currency. Musk also indicated the company continues to hold the digital dogecoin, but did not indicate its value or amount.

Under U.S. accounting rules, Tesla’s bitcoin holdings must be held as a so-called ‘intangible’ asset on its corporate balance sheet. That means that, like the value of “goodwill”, it can’t be increased.

However, it can be marked down when bitcoin prices decline, leaving Tesla’s stock price at least partly-linked to bitcoin fluctuations.

Musk told investors on a conference call last week that  “the reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the COVID lockdowns in China would alleviate.” Tesla’s bitcoin sale ensured the group was cash-flow positive for the second quarter

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“It was important for us to maximize our cash position, given the uncertainty of the Covid lockdowns in China,” Musk said. “We are certainly open to increasing our bitcoin holdings in future, so this should not be taken as some verdict on bitcoin. It’s just that we were concerned about overall liquidity for the company, given Covid shutdowns in China.”

Tesla shares were marked 1.26% lower in early trading Monday to change hands at $806.47 each, a move that would leave the stock with a year-to-date gain of 25%.

The carmaker also said it received a new subpoena from the SEC, dated June 13, related to Musk’s Tweets about taking the company private in 2018.

The SEC filing also indicated Tesla boosted its 2022 capital spending estimate to between $6 billion and $8 billion, from its prior forecast of between $5 billion and $7 billion, with a similar tally expected for the following two years. 

Last week, Tesla posted stronger-than-expected second quarter earnings and reiterated its goal for full-year delivery growth despite input price pressures and narrowing profit margins.

Tesla said adjusted earnings for the three months ending in June rose 56.5% from last year to a Street-beating, $2.27 per share, although revenues were modestly light at $16.94 billion. 

Gross automotive margins were 27.9%, Tesla said, a 500 basis point decline from last year, Tesla said, just inside the Street forecast of 28.2%, owing to put a surge in input costs and expenses linked to the ramp-up of new factories in Austin and Berlin.

The group also said it expects full year deliveries to grow 50% from 2021 levels, implying a target of 1.4 million vehicles that Tesla CFO Zachary Kirkhorn said has become “more difficult but remains possible with strong execution.”