In February of 2021, Tesla revealed its intention to sell automobiles using Bitcoin, prompting the price of the cryptocurrency to skyrocket, while also purchasing $1.5 billion worth of the crypto.
One BTC was valued at around $43,000 at the time of the investment. Elon Musk, CEO of Tesla, was then quite positive about the crypto’s future, stating that the company believes in the “long-term potential” of digital assets as an “investment and liquid alternative to cash.”
Due in part to the billionaire’s passionate support of cryptocurrency, the price of Bitcoin reached historic highs of about $70,000 by autumn.
But then the bear market would soon start to rear its ugly head and changed the landscape.
Tesla Records Major Bitcoin Loss
Fast forward to Feb. 1st, 2023 – Bitcoin is trading at $23,133 – losing more than half its value since its all-time high in the autumn of 2021.
Tesla has removed the verbiage from its previous annual reports that appeared to indicate an optimistic stance on investing in cryptocurrency.
Tesla stated in a regulatory filing with the United States Securities and Exchange Commission on Tuesday that its Bitcoin holdings suffered a gross impairment loss of $204 million in 2022.
Image: Crypto Insiders
The term “impairment” refers to a decline or loss in an asset’s value. It can be caused by a change in economic conditions, as the bear market that shook the market after Terra Luna’s implosion in May of last year.
In the latest filing, Tesla disclosed that:
“During the years ended December 31, 2022 and 2021, we recorded $204 million and $101 million of impairment losses on such digital assets. During the years ended December 31, 2022 and 2021, we realized gains of $64 million and $128 million, respectively.”
Despite losing about 70% of its value, some market analysts believe bitcoin has remained robust and may undergo a rebound, particularly as consumers intimidated by the crypto market flock toward more developed ecosystems, such as Bitcoin and Ethereum (ETH).
Tesla Losses Grow Double Since 2021
Tesla was one of the first companies to make substantial investments in bitcoin. The automaker ceased accepting BTC payments for the purchase of its vehicles in May 2021, as it began to lose faith in its investment because of the cryptocurrency’s high energy usage.
BTC total market cap at $444 billion on the daily chart | Chart: TradingView.com
Tesla’s impairment losses have roughly grown twofold since 2021, when the car builder declared a $101 million impairment on digital assets and a $128 million gain from the sale of Bitcoin, according to a 2021 SEC filing.
Meanwhile, Elon Musk has previously claimed that Tesla also possesses some Dogecoin (DOGE), although the exact amount is unknown.
The Austin, Texas-headquartered Tesla has never declared a purchase of DOGE, but the meme coin is accepted as payment for some of the company’s online-only items.
Featured image from Republic World