E-car manufacturer Tesla has reported a $170 million impairment loss on its Bitcoin bet in its recent quarterly 10-Q filing with the U.S. Securities and Exchange Commission.
According to accounting rules, Bitcoin is considered to be a collectible. This means that cryptocurrency investments are generally held at a cost. Companies are required to recognize impairment charges if the fair value of the cryptocurrency falls below its carrying value.
The manufacturer of electric cars acquired an aggregate $1.5 billion worth of Bitcoin in February 2021. In April, Tesla announced that it had sold a portion of its holdings in order to test the cryptocurrency’s liquidity. In the second quarter of 2021, the company recorded a $23 million impairment loss due to declining cryptocurrency prices.
In early February, Tesla said that it had recorded an impairment loss of $101 million due to the changing value of Bitcoin in 2021. The largest cryptocurrency peaked at roughly $69,000 last November, but its price started falling precipitously shortly after this.
Tesla announced that it had sold most of its Bitcoin holdings in late July, citing macroeconomic concerns.
As reported by U.Today, Tesla did not buy or sell any Bitcoin holdings in the third quarter. The e-car company continues to hold roughly $218 million.
The Tesla (TSLA) stock is down 37% over the past six months. The stock recently took a fresh beating due to a significant revenue miss.