Tesla’s decision to empty most of its Bitcoin (BTC) treasuries generated huge profits for the company in the second quarter, even as cryptocurrency prices plunged into a bear market.
In the first six months of 2022, Tesla recorded $170 million in impairment losses “caused by changes in the book value” of its bitcoin holdings, according to an official Form 10-Q filing with the U.S. Securities and Exchange Commission, or SEC. After selling 75% of its BTC dollar balance in the second quarter, the company made a realized gain of $64 million.
In finance, an impairment loss occurs when the fair value of an asset held by the company falls below the carrying amount of the investment.
Tesla reported earnings per share of $2.27 in the second quarter on revenue of $16.93 billion. Although profitability was lower compared to the first quarter, it was up from last year’s levels. However, the company’s profitability was affected by rising inflation and increased competition for battery cells.
The electric car maker still has 10,800 bitcoins on its books, according to Bitcoin Securities. At a current price of around 22,000 BTC, Tesla’s digital assets are worth about $237 million.
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The 10-K disclosure did not reveal any new insights into Tesla’s digital asset strategy. However, the company stated that it may increase or decrease its holdings over time:
“As with any investment and consistent with how we manage cash-based cash and cash equivalent accounts, we may increase or decrease our holdings of digital assets at any time based on business needs, our view of the market and environmental conditions.”