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Tesla reports BTC-related ‘impairment’ of $23 million after BTC tumbled 40% in 2021

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Tesla, a major electric car manufacturer led by Elon Musk, has reported a record operating income of $1.3 billion in the second quarter of 2021—which was “partially offset” by a “BTC-related impairment of $23M.”

“Operating income increased [year-over-year] mainly due to volume growth and cost reduction. Positive impacts were partially offset by growth in operating expenses including increased SBC, Model S/X ramp (negative margin in Q2), additional supply chain costs, lower regulatory credit revenue, BTC-related impairment of $23 million, and other Items,” Tesla revealed in its quarterly earnings report.

What is an impairment loss?

An “impairment cost” represents expenses that must be included in the accounting when the book value of a certain asset becomes greater than the “recoverable amount.” However, “BTC-related impairment of $23 million” is the only line where BTC has been mentioned in the document, so details are scarce. 

As CryptoSlate previously reported, the company announced its $1.5 billion investment in BTC in early February when the coin was trading at around $35,000.

At the end of March, Tesla reported that its BTC holdings’ price surged to $2.48 billion amid the Q1 bull rally. However, the crypto market faced a massive correction in May, which resulted in the value of most digital assets dropping by roughly 50% over the past couple of months.

Do the BTC holdings really affect Tesla’s balance sheet?

At the same time, Tesla doesn’t account for BTC as a mark-to-market asset, which means that the crypto’s price swings should not affect its profits—or losses—unless the company actually sells its BTC.

However, even considering this impairment, Tesla’s operating income amounted to $1.3 billion in Q2 2021—roughly quadrupling compared to the same period in 2020. The firm also reported total revenue of $11.96 billion and earnings per share of $1.45.

Lately, Tesla’s relationship with BTC was a turbulent one. Most notably, its CEO drew the ire of crypto enthusiasts when he first announced that Tesla will begin accepting BTC for its electric cars in late March—only to retract it a couple of months later over ecological concerns.

The post Tesla reports BTC-related ‘impairment’ of $23 million after BTC tumbled 40% in 2021 appeared first on CryptoSlate.


All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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