A Tesla store in Beijing, China on July 4, 2021.
Cost photo | Barcroft Media | Getty Images
Tesla said Monday that a $ 23 million Bitcoin-related impairment charge weighed slightly on quarterly operating income.
The electric car company only referred to Bitcoin or crypto once in its second-quarter announcement after CEO Elon Musk went back and forth over whether Tesla would accept the digital currency for vehicle purchases. The topic didn’t come up at all on Tesla’s conference call with investors and analysts.
In February, Tesla announced a $ 1.5 billion Bitcoin purchase – more than its entire quarterly research and development budget – and said it may continue to invest in cryptocurrencies. At the end of March, the company said it was valued at $ 2.48 billion based on the rise in bitcoins in the first quarter.
Tesla reported a net profit of $ 101 million from the sale of Bitcoin in the first quarter, which helped push its net profit to a record high. In the company’s operating accounts, that gain shows up as a decrease in operating costs, suggesting that some of its holdings were flipped when bitcoin prices rose this quarter.
But the price of Bitcoin fell more than 40% in the second quarter, leaving Tesla’s holdings would be worth much less than at the end of the first quarter. That The cryptocurrency peaked above $ 63,000 in April and then fell below $ 30,000 earlier this month. Bitcoin is currently trading at just under $ 40,000.
Tesla does not consider Bitcoin as a mark-to-market asset, which means that it only recognizes a profit advantage when it is sold to secure profits. Therefore, Bitcoin’s depreciation should not affect profits as long as Tesla has not sold any of its holdings.
This is a different way of reporting investments than companies that support tech startups through their venture arms. In these cases, companies usually rate their holdings quarterly based on the market price and determine the value through a follow-up financing round or a public share price.
Despite Bitcoin spending, Tesla’s operating income quadrupled to $ 1.3 billion from the same period last year. Revenue of $ 11.96 billion and earnings per share of $ 1.45 exceeded analyst estimates, according to Refinitiv.
Tesla stock rose 1.4% in after-hours trading on Monday to $ 666.59. The stock, which has been among the best performers in the market in recent years, has fallen more than 25% since January.
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