Saturday, July 12, 2025

Latest

Tesla And Its US$500-Million Bitcoin Problem

Among the current issues hurling Tesla (Nasdaq: TSLA), it seems like problems are something of which it won’t run out of supply. With bitcoin hitting its all-time low for the year, the automaker’s then-bullish investment in the crypto asset could spell trouble for its next earnings release.

The digital coin is sustaining massive losses from a series of factors stemming from the whiplash of the rising inflation. Crypto lender Celsius Network alone sent the market plummeting after it lost 70% of its CEL token’s value following its decision to halt all withdrawals.

The bullish outlook

Back when bitcoin was the darling of the crowd investors, the automaker bought around US$1.5-billion worth of the digital asset, making it the second-biggest public company holder.

Image

“We believe in the long-term potential of digital assets both as an investment and also as a liquid alternative to cash,” the company said at the time of the purchase. The bitcoin value then traded around US$34,000.

The firm then sold in the same quarter around US$272-million worth of bitcoin when the price hit the US$50,000-mark.

The whiplash

As it stands, when the value of the digital asset increases, the gains are not reflected in the firm’s financials as these are considered “indefinite-lived intangible assets.” But the decline in value from the asset’s book value should be reported as an impairment charge.

With bitcoin traversing the US$22,000-mark, Tesla’s US$1.5 billion purchase in 2021 is now effectively worth around US$1.0 billion. Any potential drastic change notwithstanding, the automaker is looking at recording an impairment loss of around US$500 million.

The potential loss adds to the company’s growing laundry list as it was also recently kicked off the S&P 500 ESG Index due to “codes of business conduct.” The share price decline that followed cost Musk US$12.4 billion.

The prospect of Tesla as an institutional hodler following this windfall is quite unclear. In April 2022, former Twitter (NYSE: TWTR) CEO Jack Dorsey’s digital payment firm Block (NYSE: SQ) announced its partnership with crypto firm Blockstream to create a renewable energy-powered bitcoin mining facility in Texas using Tesla’s solar and energy storage products.

In the meantime, should bitcoin price don’t pick up, there’s an anticipated blemish to the automaker’s quarterly financials come July.

Tesla last traded at US$647.21 on the Nasdaq.


Information for this briefing was found via Seeking Alpha and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Mergers Set the Stage for Uranium’s Growth Cycle | Forum-Baselode Merger

The Goal is Gold Production as Soon as Possible! | Gordon Robb – ESGOLD Corp.

Snowline Gold: The Multi Billion Dollar Valley PEA

Recommended

First Majestic Produces 7.9 Silver Equivalent Ounces In Q2, Lifts Production Guidance

Antimony Resources Drills 4.17% Antimony Over 7.4 Metres At Bald Hill

Related News

Elon Musk’s xAI Pursues Revenue Share Deal with Tesla

In a growing web of interconnectedness between Elon Musk’s companies, the artificial intelligence startup xAI...

Monday, September 9, 2024, 10:32:00 AM

Start-Up EV Maker Rivian Files Paperwork for IPO

On August 27, the private start-up electric vehicle manufacturer Rivian submitted a widely anticipated confidential...

Tuesday, August 31, 2021, 03:37:00 PM

SPAC to the Future: SBE Stock Shows The Electric Potential In ChargePoint

This obscenely overvalued stock market is especially noisy. The information trying to move it flies...

Sunday, January 24, 2021, 08:30:00 AM

Bitfarms Secures $20.0 Million Investment From US Institutions

Bitfarms Ltd (TSXV: BITF) this morning announced that it has secured a private placement with...

Monday, January 4, 2021, 08:45:44 AM

Elon Musk Appoints Linda Yaccarino as Twitter CEO, Whilst Reportedly Mulling New CEO for Tesla

Outgoing Twitter CEO Elon Musk confirmed rumours he will be appointing NBCUniversal head of advertising...

Friday, May 12, 2023, 03:24:01 PM