Tesla Reports $51M Bitcoin-Related Impairment Loss In Q3

Electric vehicle manufacturer Tesla Inc TSLA recorded a $51 million impairment loss on its Bitcoin BTC/USD investments in the third quarter.

What Happened: According to its third-quarter earnings release, Tesla earned its “best ever” results in net income for the quarter: a record $2.093 billion.

The company reported $2 billion in operating income, which the company said “increased substantially” since the previous year due to vehicle growth and cost reductions.

The positive impacts were reportedly partially offset by a Bitcoin-related impairment loss of $51 million, amongst other things.

The company added $1.5 billion Bitcoin to its balance sheet in February 2021 to further diversify and maximize returns on its cash that was not immediately needed to maintain operating liquidity.

In the first quarter, the company sold 10% of its BTC holdings, worth $272 million at the time, allegedly to “prove liquidity of Bitcoin as an alternative to cash.”

The company’s Bitcoin sale resulted in a $101 million addition to its profitability during the quarter.

In the second quarter, Tesla did not buy or sell any BTC, but the digital asset’s downtrend in price forced the company to report a loss of $23 million.

Tesla’s Bitcoin-related impairment loss in the third quarter far exceeds that of the second quarter, but these figures could look very different in the next quarter based on Bitcoin’s current price trajectory.

Price Action: Bitcoin has been heading higher since the beginning of October, but on Thursday morning is trading down 4.50% at a price of $63,887.58. The digital asset hit an all-time high of $66,900 on Wednesday. Tesla shares are up 3.86% at $899.25 Thursday morning.

Photo: Austin Ramsey on Unsplash