Elon Musk’s electric car company Tesla’s Bitcoin holdings were worth nearly $2 billion at the end of last calendar year, as per the company’s official filing with the US Securities and Exchange Commission (SEC).
The fair market value of Bitcoin holdings stood at $1.99 billion on December 31, 2021, the company said. Bitcoin prices had started falling off after hitting record highs in November 2021. Bitcoin has had a rough start this year but has now regained some stability.
Tesla made gains of around $128 million in 2021 from the sale of a portion of its holdings last March, but impairment losses due to a drop in Bitcoin prices stood at $101 million. The company said it has recorded its overall gains of $27 million as a negative loss under restructuring and other expenses.
“Gains are presented net of impairment losses in restructuring and other in the consolidated statement of operations. As of December 31, 2021, the carrying value of our digital assets held was $1.26 billion, which reflects cumulative impairments of $101 million,” Tesla stated.
In February 2021, Tesla announced the purchase of a total of $1.5 billion in Bitcoin. This was more than its entire research and development budget that quarter. The company also said it may continue investing in Bitcoin
According to Bitcoin Treasuries data, Tesla holds 43,200 Bitcoins which means that although the value of its holdings has significantly shrunk after the price drops, it remains well above the initial purchase price.
Tesla does not mark to market Bitcoins as an asset, so they do not affect the earnings of the company except when it either adds fresh Bitcoins or sells some. This also means that even when Bitcoin prices drop, the earnings will not be impacted unless the company divests any of its holdings.
In 2021, Tesla started accepting payments in Bitcoin in certain regions for specific models but later revoked the change, citing environmental concerns. However, in October 2021, the car manufacturer told the SEC that it might accept Bitcoin payments again as there seems to be an improvement in the energy mix of the crypto’s mining.
According to Tesla's cash flow statement, the electric car giant has also been HODLing its Bitcoin with only one sale in Q1 of 2021. The term ‘HODL’ has been used interchangeably with ‘hold’ in the world of cryptocurrencies after a user erroneously tweeted that he was ‘HODLing’ his crypto through the price drops.
The company also told the SEC that it may increase or decrease its digital asset holdings at any time based on the needs of the business and their view of the market and environmental conditions. It also pointed out that the company believes in the long-term potential of digital assets both as an investment and as a liquid alternative to cash.
Despite the early indications, Tesla has still not started accepting Bitcoin payments for its cars, probably due to all the emission concerns still surrounding the world’s oldest cryptocurrency. “When there’s confirmation of reasonable (~50 percent) clean energy usage by miners with the positive future trend, Tesla will resume allowing Bitcoin transactions,” Elon Musk said in June 2021.
The company’s report, however, did not include any details of its holdings of Dogecoin that Elon Musk has often been promoting as a better store of value. The company had started accepting Dogecoin payments for some merchandise.
