Tesla has been in the news for quite a number of controversial reasons related to Bitcoin. Early last year, CEO Elon Musk was all about Bitcoin which made huge progress in the early part of the year. Tesla acquired $1.5 billion worth of Bitcoin and also went as far as accepting Bitcoin as a means of payment for its electric vehicles. This, however, was short-lived as the company had to put a stop to this medium of payment in May out of concerns about how Bitcoin was being mined.
In the year 2021, Bitcoin suffered extreme volatility falling as low as below $30,000 after reaching a high of almost $70,000. The problems faced by Bitcoin were a result of China’s continued crackdowns as well as other minor factors.
As seen in its SEC filing, Tesla doesn’t account for Bitcoin as a mark-to-market asset. What this means is that the company’s earnings are only affected when it buys or sells Bitcoin, so as long as the company has not sold off any of its Bitcoin earnings, the drop in the value of Bitcoin shouldn’t affect its earnings.
The filing also showed that Tesla recorded $101 million worth of impairment losses from its Bitcoin investment in 2021. It also added that it realized gains of $128 million after selling a portion of its holdings in March last year. Overall, Tesla gained $27 million in its crypto transactions during the year, recorded as a negative loss in restructuring and other expenses.
Tesla recently announced its earnings for the fourth quarter of 2021. The company reported better-than-expected earnings that surpassed the expectations of analysts. According to the company’s statement, Tesla’s revenue soared 65 percent YoY with automotive revenue totalling $15.97 billion, up 71 percent, adding that “2021 was a breakthrough year for Tesla.