Tesla Reports $34M Impairment Charge on Bitcoin Holdings in Q4 2022

In its latest earnings report released Wednesday, Tesla revealed it had neither bought nor sold any Bitcoin in the final quarter of 2022.

The electric car manufacturer, however, reported $34 million in impairment charges as the value of its Bitcoin holdings declined to $184 million from $218 million in Q3 2022.

In the world of accounting, an impairment charge is the reduction of an asset's value below its carrying amount or the acquisition cost of an asset. In the context of Tesla’s Bitcoin holdings, this means that while the company still holds the same amount of BTC in its balance sheet, the market value of the stash has dropped compared to the previous quarter.

Bitcoin traded just under $20,000 at the end of September 2022, before falling below $16,000 by the end of the year, according to CoinGecko.

Tesla and Bitcoin

Tesla joined the ranks of corporations holding the leading cryptocurrency when it revealed a $1.5 billion investment in Bitcoin in February 2021, with the news pushing the price of BTC to new record highs at the time.

The firm sold 10% of its Bitcoin holdings in Q1 2021 "to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet," with the next significant sale coming in the second quarter of 2022 when Tesla revealed that it had sold 75% of its Bitcoin holdings.

At the time, the company’s balance sheet showed sales from digital assets amounting to $936 million, with Musk pointing to uncertainty surrounding Covid lockdowns in China and the need to maximize the company’s cash to justify the sale.

The sell-off left Tesla with 10,725 BTC in its portfolio. The company—despite all the turmoil in the markets—continued to hold the stash throughout the second half of 2022.

This makes Tesla the fifth-largest public company with Bitcoin on its balance sheet.

Michael Saylor’s Microstrategy still tops the ranks with 132,500 BTC worth over $3 billion in today’s prices, per Buybitcoinworldwide.