Contrary to popular belief, the filing shows Tesla recorded $68M in profit from BTC sale

Tesla has recently been the talk of the town within the crypto community. The electric vehicle company dumped about 75% of its BTC holdings despite CEO Elon Musk claiming the firm has “diamond hands” last year, sparking reactions and the belief that the company’s BTC bet was a fiasco, considering current market conditions. However, a filing shows Tesla made considerable gains from its BTC sale.

Despite an impairment loss of $170M, Tesla made $68M from BTC sales

Information from a Form-Q filing with the U.S. Securities and Exchange Commission (SEC) by Tesla for the second quarter of 2022 reveals that the electric vehicle firm profited from its BTC bet to the tune of $68M. “In the first quarter of 2021, we invested an aggregate $1.50 billion in bitcoin,” the firm says in the filing.

Tesla further noted that it incurred an impairment loss of $170 million from the beginning of 2022 to June 30, 2022 due to new market realities that affected the value of BTC. Nonetheless, the company concluded by stating that it made $68 million in realized profit from periodic conversions of BTC to fiat.

An impairment loss occurs when the carrying amount of a company asset is recognisably reduced due to a plunge in its fair value. The company also added that it recorded realized gains of $128 million upon conversions of its digital assets to fiat in the six months leading to June 30, 2021. 

Tesla may buy more digital assets or dump more of its holdings in the future 

Tesla also mentioned that it may add more digital assets to its balance sheets. “As with any investment and consistent with how we manage fiat-based cash and cash equivalent accounts, we may increase or decrease our holdings of digital assets at any time based on the needs of the business and on our view of market and environmental conditions,” the firm said.

On July 20, Tesla’s Cash Flow Statement revealed that the firm had dumped 75% of its BTC holdings amidst the gloomy market situation. The crypto community was filled with mixed reactions, especially as CEO Elon Musk is considered one of the notable proponents of crypto assets, consistently promoting Dogecoin in the past.

Musk later cleared the air, noting that the company’s decision to sell off part of its BTC holdings had absolutely nothing to do with its outlook on Bitcoin, but that it was solely a means to address its Cash Flow situation. 

Per data from Bitcoin Treasuries, Tesla still has 10,800 BTCs on its balance sheet. If information from the filing is anything to go by, the crypto community could witness another BTC sale from the firm, or further purchases as was the direction with Michael Saylor’s MicroStrategy which purchased 480 more BTCs amidst the Crypto Winter.