{"id":1593186,"date":"2022-07-25T12:05:00","date_gmt":"2022-07-25T16:05:00","guid":{"rendered":"https:\/\/wordpress-1016567-4521551.cloudwaysapps.com\/?post_type=station&#038;p=1593186"},"modified":"2022-07-25T12:05:14","modified_gmt":"2022-07-25T16:05:14","slug":"tesla-hit-with-170-million-impairment-charge-on-bitcoin-holdings","status":"publish","type":"station","link":"https:\/\/platodata.io\/plato-data\/tesla-hit-with-170-million-impairment-charge-on-bitcoin-holdings\/","title":{"rendered":"Tesla Hit With $170 Million Impairment Charge on Bitcoin Holdings\u00a0"},"content":{"rendered":"<div><\/div>\n<div class=\"coincodex-content\">\n<p>Elon Musk\u2019s car manufacturer Tesla recorded a $170 million impairment charge for Bitcoin on its balance sheet during the first half of 2022. It also netted $64 million in gains from certain sales of the asset.<\/p>\n<ul>\n<li>The information comes attached to a 10-Q SEC filing from Monday. Tesla <a href=\"https:\/\/www.marketwatch.com\/story\/tesla-records-170-mln-impairment-charge-on-bitcoin-271658746209#:~:text=Tesla%20Inc.%20said%20it%20recorded,sales%20of%20its%20bitcoin%20holdings.\" data-wpel-link=\"external\" target=\"_blank\" rel=\"noopener\">explained<\/a> that it may make \u201cno upward revisions\u201d for subsequent Bitcoin price increases until it actually sells the asset.<\/li>\n<li>When accounting, digital assets are defined as \u201cindefinite-lived intangible assets.\u201d As such, Tesla must recognize any decreases to the value of Bitcoin during the reference period below its carrying value \u2013 even if its price rebounds in short order.<\/li>\n<li>Due to the high volatility of cryptocurrencies, this rule creates difficulty for companies seeking to hold such assets on their balance sheets. The Financial Accounting Services Board <a href=\"https:\/\/cryptopotato.com\/fasb-votes-to-review-accounting-rules-for-crypto-on-balance-sheets-saylor\/\" data-wpel-link=\"internal\">agreed<\/a> to review the accounting rules pertaining to digital assets in May but is yet to hold a formal discussion on the matter.<\/li>\n<li>\u201cThese charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase,\u201d said Tesla.<\/li>\n<li>Looming impairment costs were part of the reason Tesla opted to <a href=\"https:\/\/cryptopotato.com\/tesla-sold-936-million-of-its-bitcoin-holdings-in-q2\/\" data-wpel-link=\"internal\">cash out<\/a> its Bitcoin in Q2., leaving only 25% of its original position remaining.<\/li>\n<li>CEO Elon Musk later <a href=\"https:\/\/cryptopotato.com\/elon-musk-reveals-the-reason-why-tesla-sold-75-of-its-bitcoin\/\" data-wpel-link=\"internal\">clarified<\/a> that the selloff was related to his company\u2019s need for cash, and not to his overall thesis on Bitcoin or crypto investing.<\/li>\n<li>As of July 2021, Musk <a href=\"https:\/\/cryptopotato.com\/elon-musk-i-personally-own-bitcoin-ethereum-and-dogecoin\/\" data-wpel-link=\"internal\">said<\/a> that he personally owns Bitcoin, with smaller allocations put towards Ethereum and Dogecoin.<\/li>\n<li>In Q1, Microstrategy <a href=\"https:\/\/cryptopotato.com\/microstrategy-registers-a-170-million-impairment-charge-on-bitcoin-in-q1\/\" data-wpel-link=\"internal\">recorded<\/a> an equal $170 million impairment loss on its much larger Bitcoin position. Its Q2 loss figures are yet to be revealed.<\/li>\n<\/ul>\n<div class=\"code-block code-block-12\">\n<div>\n<div style=\"text-align: center\"><span>SPECIAL OFFER (Sponsored)<\/span><\/div>\n<p><b>Binance Free $100 (Exclusive): <a href=\"https:\/\/cryptopotato.com\/pl\/binancebanner\" rel=\"nofollow\" data-wpel-link=\"internal\">Use this link<\/a> to register and receive $100 free and 10% off fees on Binance Futures first month<\/b> (<a href=\"https:\/\/cryptopotato.com\/buy-bitcoin-5-easy-steps\/\" data-wpel-link=\"internal\">terms<\/a>).<\/p>\n<p><b>PrimeXBT Special Offer: <a href=\"https:\/\/cryptopotato.com\/pl\/primexbt2\" rel=\"nofollow\" data-wpel-link=\"internal\">Use this link<\/a> to register &amp; enter POTATO50 code to receive up to $7,000 on your deposits.<\/b><\/p>\n<\/div>\n<\/div>\n<div class=\"rp4wp-related-posts rp4wp-related-post\">\n<h3>You Might Also Like:<\/h3>\n<\/p><\/div><\/div>\n<div class=\"share\">\n<div>\n\t\t\t\t\t\t\t\t\tEnjoy reading? 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