In early 2021, both Elon Musk and Tesla announced that they bought a ton of cryptocurrency – over $1.5 billion in bitcoin, to be exact. While things may have started out on a positive note, the volatility and price swings of 2022 have caused both figures to suffer dramatically, and it appears these bitcoin investments have brought each of them down.
Elon Musk Hasn’t Had a Good Bitcoin Run
It was announced earlier this year that both figures had lost a lot on their bitcoin investments, and thus much of that $1.5 billion first bought in early 2021 was eventually sold. However, Musk still chose to hang onto some of the bitcoin – about $250 million worth of it, for he knew that more than likely bitcoin would make enough of a comeback that he could potentially see some level of return on his investment.
Still, however, it appears the money that he’s hanging onto came with a $170 million impairment loss. This is the news that’s being reported in the Tesla quarter three earnings report. Things have not quite evened out for the electric vehicle company, as while the company managed to earn about $64 million in profits thanks to converting some of the purchased bitcoin back into fiat, the enterprise still lost about $170 million over a nine-month period. It’s a sad and ugly sight.
It’s been said that the company parted with close to $1 billion in BTC during the second quarter of the year. Contrary to popular belief, this wasn’t necessarily done because bitcoin was bombing, but rather because the company needed quick cash due to ongoing COVID-based lockdowns occurring in China, where the electric car manufacturer repeatedly does business.
In a statement, representatives of Tesla mentioned:
Digital assets are considered indefinite-lived intangible assets under applicable accounting rules. Accordingly, any decrease in their fair values below our carrying values for such assets at any time after their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale. For any digital assets held now or in the future, 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.
Keeping All Companies Under One Roof?
As economic conditions worsen, Musk has mentioned that while he hasn’t made a formal decision yet, he’s considering putting all the companies he owns under a single stock umbrella, thus creating a super conglomerate. He mentioned in an interview:
It’s not clear to me what the overlap is. It’s not zero, but it’s — I think we’re reaching. I’m not worried about it.
Nearly two years ago, Musk chose to allow bitcoin holders to pay for electric cars with their assets, though this decision was later rescinded due to energy concerns.
Tags: bitcoin, Elon Musk, Tesla
This article has been originally published at: https://www.livebitcoinnews.com/elon-musk-may-have-been-mistaken-investing-in-btc/