Tesla Records $170 Million Impairment Charge on Bitcoin

By Will Feuer

Tesla Inc. said it recorded a $170 million impairment charge against the carrying value of its bitcoin holdings for the first six months of the year, as well as gains of $64 million from certain sales of its bitcoin holdings.

Because accounting rules define digital assets as indefinite-lived intangible assets, Tesla said that it must recognize impairment charges to reflect any decrease in the fair value of cryptocurrencies held by the company below their carrying values.

"We may make no upward revisions for any market price increases until a sale," the company said in a securities filing. "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."

Last week, Tesla Chief Executive Elon Musk said the company sold $936 million worth of bitcoin in the second quarter to maximize its cash position as it dealt with the closure of its Shanghai factory due to local Covid-19 lockdowns. The company has unloaded around 75% of its $1.5 billion initial position in the cryptocurrency, leaving it with about $218 million worth of digital assets as of the end of June.

Mr. Musk has been a vocal commentator on digital currencies. Tesla briefly accepted bitcoin as payment for its vehicles but suspended that policy in May 2021, citing concerns about the use of fossil fuels to mine bitcoin. Mr. Musk said at the time that Tesla wouldn't sell any bitcoin.

Write to Will Feuer at [e-mail]

(END) Dow Jones Newswires

July 25, 2022 07:05 ET (11:05 GMT)

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