Tesla Reports USD 101M of Impairment Loss from Bitcoin Investments in 2021
Electric car manufacturer Tesla saw some USD 101m of impairment losses in 2021 as a result of bitcoin (BTC) price changes and therefore in the value of the company’s BTC holdings.
This was disclosed in a filing with the US Securities and Exchange Commission (SEC) for the previous fiscal year, in which the company stated that:
“[I]n the year ended December 31, 2021, we recorded approximately [USD] 101 million of impairment losses resulting from changes to the carrying value of our bitcoin and gains of [USD] 128 million on certain sales of bitcoin by us.”
In the first quarter of 2021, Tesla invested an aggregate of USD 1.5bn in bitcoin. Furthermore, they realized gains of USD 128m “in connection with selling a portion” of their holdings in March 2021, says the filing.
As of December 31, the carrying value of Tesla’s digital assets was USD 1.26bn, while the fair market value of such digital assets held as of December 31, 2021, was USD 1.99bn, the company wrote.
Meanwhile, as reported, US-based business software firm MicroStrategy posted a fourth-quarter loss after taking a USD 146.6m impairment charge to write down the value of its BTC holdings. The net loss was USD 90m, or USD 8.43 per share on a diluted basis.
As for Tesla, they added that they expect operating expenses to grow in 2022 as they are expanding operations globally.
“As long as we see expanding sales, and excluding the potential impact of macroeconomic conditions including increased labor costs and impairment charges on certain assets […], we generally expect operating expenses relative to revenues to decrease as we continue to increase operational efficiency and process automation,” the filing stated.
The filing also disclosed that on November 16 last year, the SEC issued a subpoena to the company “seeking information on our governance processes around compliance with the SEC settlement” reached in September 2018. It concerns an ongoing dispute between the regulator and Tesla’s chief Elon Musk, which started with Musk’s tweets and the SEC alleging he committed securities fraud by saying he had secured funding for the company to go private. The company, per the settlement, should have had overseen Musk’s communications.
Just days before that November subpoena was issued, Musk had asked his followers in a tweet if he should send 10% of his Tesla shares – sending the price of the stocks into a dive. This may have prompted the subpoena, but the filing doesn’t provide details on that.
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