Tesla records $51M Bitcoin impairment charge in Q3 despite profit growth
Electric carmaker Tesla Motors, Inc. (TSLA) on Wednesday reported that its third-quarter revenue surged 57% to US$13.76 billion from US$8.77 billion last year, and a net income of US$1.62 billion for the quarter. However, the company’s digital assets were hit by a Bitcoin-related impairment of US$51 million, down to US$1.26 billion in digital assets from US$1.31 billion in the previous quarter, according to the company’s Q3 2021 earnings presentation.
- There were no new sales or purchases of digital assets in the latest two quarters, the company said. In February, the electric-car manufacturer said it had invested US$1.5 billion in Bitcoin, and subsequently sold 10% of its stake in April, Tesla’s CEO Elon Musk revealed in a tweet.
- Tesla holds crypto as an “indefinite-lived intangible asset,” according to the U.S. Financial Accounting Standards Board. The company is required to record the value of Bitcoin at the time of purchase. If Bitcoin falls well below the price at the time it was purchased, the company must write down the value of its holdings as an impairment charge.
- In May, Tesla suspended the use of Bitcoin to purchase vehicles, citing the enormous environmental cost of mining and processing cryptocurrency transactions. But in July, Musk said Tesla would “most likely” consider accepting crypto transactions again. “It looks like Bitcoin is shifting a lot more towards renewables and a bunch of the heavy-duty coal plants that were unequivocally being used have been shut down, especially in China. I want to do a little more diligence to confirm that the percentage of renewable energy usage is most likely at or above 50% and that there is a trend towards increasing that number. If so, Tesla will resume accepting Bitcoin,” he said.
- Earlier this month, Musk tweeted in support of the meme-based cryptocurrency Dogecoin, which brought cryptocurrency’s price broadly up on Oct. 14.
- Tesla said it produced approximately 238,000 vehicles and delivered over 240,000 vehicles in Q3. In its earnings presentation, the company said it reached an operating margin of 14.6%.