Elon Musk’s Tesla has reported $23 million in impairment related to Bitcoin in its second quarter’s operating income following the digital currency’s price drop to $30,000-mark in June. According to the company’s 10-K form filed with the Securities and Exchange Commission (SEC) and seen by The Outlooker Online, digital assets like Bitcoin are considered as “indefinite-lived intangible assets” under accounting rules in the US. This meant any decrease in their fair values below Tesla’s asset values for digital currencies at any time will require Tesla to record impairment. This also meant that even during Bitcoin’s price rise, Tesla would not make any upward revisions of its holdings unless the company sells its Bitcoins, “which may adversely affect our operating results in any period in which such impairment occurs,” Tesla noted in its 10-K form.
However, the $23 million loss might not hurt Tesla given its investment worth over billion dollars in Bitcoin. The company’s operating income had jumped 301 per cent jump to $1.3 billion from $327 million in Q2 2020, showed its quarterly earnings presentation. Importantly, the company didn’t make any sale or purchase of Bitcoins as well during the quarter after its $1.5 billion purchase of Bitcoins in Q1, of which $272 million worth of Bitcoins were sold in Q1 itself. The company’s current value of Bitcoins held stood at $1,311 million or $1.3 billion.
Also read: Bitcoin recovers to new high of near $40,000 in six weeks amid Amazon’s crypto job posting
Elon Musk in May this year had said that the company would stop accepting Bitcoin from customers for its electric cars amid concerns over the environmental impact of the virtual currency. However, speaking at the Bitcoin-focused conference B Word on Wednesday, Musk said he would confirm with a little more due diligence around the share of renewable energy usage that is involved in mining Bitcoins. “I wanted a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50%, and that there is a trend towards increasing that number, and if so Tesla would resume accepting bitcoin” Reuters reported quoting Musk. Musk added, “Most likely the answer is that Tesla would resume accepting bitcoin.” Back in March, Musk had announced accepting Bitcoins for selling its electric cars.
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