The CEO of Tesla surprised the entire crypto community by investing a massive amount in Bitcoin earlier this year. In February, Elon Musk invested around $1.5 billion of capital reserves from Tesla to add Bitcoin into their balance sheet. Tesla also started to accept Bitcoin as payment for its products to extend its Bitcoin reserves. However, the Tesla and Bitcoin journey came to a halt at the end of the first quarter.
In April, Tesla reportedly sold 10% of its Bitcoin reserves to check the liquidity of the market. After this sale, Bitcoin prices started to crash down. Meanwhile, the sudden crackdown of crypto mining in China decreased the hash rates for the flagship cryptocurrency by many notches. At the same time, Tesla stopped accepting Bitcoin as payment as Musk announced that Bitcoin is a threat to the environment.
As per the new filings at the end of Q2, Tesla has lost around $23 million in impairment losses with Bitcoin. CNBC reporter Kate Rooney claims that the main cause of this loss is the technical requirements of the bookkeeping. It should be noted that impairment loss refers to the decline of the market value of an asset in comparison to the balance sheet value.
As per Rooney, Tesla had added Bitcoin as an intangible asset on their balance sheets. When the value of Bitcoin dropped down below a certain level, the management needed to mark it down on the financial statement. She also explained that the recurring loss is not as high as many are estimating. As per Tesla records, a loss of $23 million occurred. Meanwhile, some have estimated that since Bitcoin has dropped below $30K, the loss could go as high as $100 million.
Tesla CEO Confirms that He will not Sell his Bitcoin Reserves
There are some major changes made to suit the cause of the flagship cryptocurrency. Attending the B-word conference, CEO Elon Musk remarked that Bitcoin mining has switched on green energy projects in great numbers. Many speculate that Tesla is close to accepting Bitcoin payments once again.
On the other hand, Musk also claimed that SpaceX might also invest some money in Bitcoin. He added in the end that the BTC stashes owned by Tesla, SpaceX, and himself would not be sold any time soon. This is taken as a positive sign for an upcoming bull rally for Bitcoin. At present, Tesla possesses $1.3 billion of Bitcoin on its balance sheet after selling a small chunk in April.