Tesla’s Bitcoin Fell $1.8B in Value As Musk Called Crypto a ‘Sideshow’

  • The worth of Tesla’s bitcoin holdings fell nearly $1.8 billion last yr, an organization filing showed.
  • It took a $204 million impairment charge on bitcoin, but converted $64 million value into dollars.
  • CEO Elon Musk distanced himself from crypto last yr, calling it a “sideshow to the sideshow.”

Tesla’s bitcoin hoard plummeted by nearly $1.8 billion last yr, as Elon Musk’s carmaker dumped a giant chunk of its holdings and cryptocurrency prices slumped.

The worth of its “fair market holdings” in digital assets fell from $1.99 billion at the top of 2021 to $191 million a yr later, the corporate said in a regulatory filing to the SEC this week, a contraction of 90%.

Tesla invested $1.5 billion into bitcoin in the primary quarter of 2021, because it said customers could begin using the token to buy its electric vehicles. It soon reneged on that promise, with Musk blaming the excessive energy requirements for mining it.

But 2022 saw a bloodbath for the overwhelming majority of crypto assets, after a bull rally through most of 2021 where prices peaked. Rising inflation and rate of interest hikes dampened the appeal of riskier assets like bitcoin, while the collapse of FTX, the failure of stablecoin Terra and a liquidity squeeze across the crypto industry also weighed in the marketplace.

Bitcoin shed nearly 65% of its value over the yr, ending it at about $16,548. Tesla bought the token within the $30,000-to-$40,000 range initially of 2022.

As crypto assets struggled, Tesla backed away from bitcoin — by July, it had sold 75% of its holdings, CEO Musk said in a quarterly earnings call, He blamed China’s COVID-19 lockdowns for the move, saying it increased the necessity for more liquidity on the EV maker.

Tesla said it took an impairment charge of $204 million on its bitcoin in 2022 because of this of its drop in value. This was partly offset by its decision to convert $64 million value of the leading crypto into fiat currency, leading to a net non-cash lack of $140 million on it bitcoin holdings.

Musk referred to Tesla’s association with cryptocurrency as a “sideshow to the sideshow” within the earnings call, as he was questioned on the long-term viability of the asset after it struggled against the economic effects inflation.

“We’re neither here nor there on cryptocurrency,” Musk told investors.

But he added the corporate was open to increasing its position within the cryptocurrency in the long run, and that its selloff “mustn’t be taken as some verdict on bitcoin.”

Tesla’s current position on bitcoin is prone to be significantly healthier now than at the top of last yr. The worth of bitcoin has risen greater than 40% through 2023 in an indication of returning bullishness for riskier assets after a dour 2022.

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