Saylor’s conviction of bitcoin’s long-term value hasn’t protected the company’s bottom line. The company posted a $1.06 billion loss in the second quarter versus a $299 million shortfall a year earlier. Microstrategy generated $122 million in revenue, $96 million in profit, from its software business through product, subscription and other services. Presumably most of Tesla’s remaining digital assets are Bitcoin but Musk said on an earnings call that Tesla hadn’t sold its Dogecoin.
The cryptocurrency has retreated from a record high of almost $69,000 in November. The largest cryptocurrency by market value traded down 1.1 percent to around $22,998 as of 11 a.m. An impairment loss occurs when the fair market value of an asset is less than its purchase price.
- However, in May 2021 itself, Tesla unprecedentedly reversed the move, within 49 days.
- Bitcoin has faced a harsh recoil from its pandemic era heights, the original crypto is down 66% from the all-time-high price of $68,721 in November 2021.
- The company also sold 75% of its bitcoin holdings, leading to a slide in the cryptocurrency price.
- Despite selling a record number of cars in June, roughly 70,000 fewer cars were sold in the second quarter compared to the first quarter.
- Tesla said it held $218 million worth of the cryptocurrency at the end of the second quarter.
Musk said COVID-related shutdowns of Tesla’s Shanghai factory had increased uncertainty for the company, and that a stronger cash position was necessary. Elon Musk headed Tesla Inc, in a letter to its shareholders, disclosed that it has sold almost 75 per cent of their Bitcoin holdings and realised cash worth $936 million in its balance sheet. Tesla released its full Q financial report and it outlined how it dealt with rising inflation, economic downturn and record lunge in price of Bitcoin and other cryptocurrencies.
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Markets were often swayed by his comments and closely observed Tesla’s crypto purchases. Digital assets are considered to be “indefinite-lived intangible assets” under accounting rules. For that reason, Tesla must value its bitcoin at its lowest point during a quarter and recognize a loss if it drops below its purchase price. But last week, Tesla reported selling 75% of its bitcoin in this year’s second quarter for $936 million. Plunging bitcoin prices have forced Tesla to record a $170 million impairment loss alongside solid second-quarter earnings, which saw a 42% jump in revenue.
Tesla’s stock is also down over 30 percent so far this year, in part due to Musk’s disastrous bid to buy Twitter. The company is already feeling the hurt from other sources, with Musk raging about supply issues and laying off a sizable portion of the company’s staff. According to one analyst’s estimates, Tesla may have lost almost half a billion from its Bitcoin investments so far. Get the Robb Report newsletter for similar stories delivered straight to your inbox.
The world’s largest cryptocurrency was last up 1.04 per cent at $23,494.57, after sliding as much as 0.5 per cent to $23,268.92 on the news. I don’t think Elon has changed his mind on Bitcoin, nor do I see the tide turning regarding the institutional adoption of Bitcoin. If https://bitcoinvaultexplorer.com/tesla-sold-bitcoin-the-reason-why/ anything, we are seeing the normalisation of Bitcoin as another financial asset. Furthermore, as mentioned above, Tesla’s sales are due to liquidity concerns. Elon Musk himself sold billions of dollars worth of shares at the company to pay for the now-messy Twitter deal.
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Tesla’s Shanghai Gigafactory was briefly closed as workers were told to stay home to avoid spreading the coronavirus. Even when the factory was allowed to reopen under a closed-loop system that forced workers to live on-site in military-style barracks, Tesla struggled with both parts shortages and shipping disruptions. The company’s CEO Elon Musk has since taken a stronger liking to Dogecoin, which he considers better for transactions.
Elon’s FUD Is A Problem For Tesla, Not Bitcoin
Although Tesla has since opened two new factories in Austin and Berlin, they didn’t scale up fast enough to make up for the loss of production in Shanghai. Tesla’s partnership with Uber and Hertz, where qualified rideshare drivers can rent the EVs to ferry passengers around in, seems to be going well based on a report from Uber in June. It also seems like 2022 will be the year non-Tesla EVs will get access to the Supercharger network in the US, based on a fact sheet released by the White House. Earlier in January, Tesla became one of the largest corporate holders of Bitcoin after purchasing $1.5 billion in BTC. The purchase was disclosed in a February filing with the Securities and Exchange Commission.