Tesla's Bitcoin losses hit a whopping $140 million in 2022

By: Henry Felix

January 31, 2023 6:45 PM

Profits from Bitcoin trading cost the electric vehicle manufacturer $64 million, which was offset by a $204 million impairment.

According to a filing with the US Securities and Exchange Commission on Jan. 31, electric vehicle maker Tesla declared a $204 million gross impairment loss on its Bitcoin (BTC) assets during 2022. Concurrently, Tesla recorded a $64 million gain from converting BTC into fiat money at various stages throughout the year, resulting in a net loss of $140 million from its cryptocurrency trading activity.

The filing went on to describe how unpredictable cryptocurrency prices affect Tesla's bottom line:

"According to the applicable accounting standards, digital assets are intangible assets with an indefinite life. As a result, any reduction in their fair values below our carrying values for such assets at any time after their acquisition will necessitate the recognition of impairment charges, whilst any market price gains will necessitate no upward adjustments until a sale. These charges may have a negative impact on our profitability in the periods in which such impairments occur, even if the overall market value of these assets increases."

Tesla put $1.5 billion into Bitcoin in the first quarter of 2021. Elon Musk, the company's founder, stated at the time that the electric vehicle maker would begin taking Bitcoin payments from customers in the United States.

Just months later, Musk reversed the restriction, citing the need for "validation of moderate (50%) clean energy usage by [Bitcoin] miners with good future trend" before the company would accept the method of payment again. In the second quarter of 2022, Tesla reportedly sold 75% of its BTC holdings.