Tesla Records $51m Bitcoin Impairment Charge
Electric car-maker Tesla yesterday reported record revenue and profits for the third quarter of the year.
However, Tesla's accounts also record a $51 million impairment charge relating to its bitcoin investment.
The company, led by CEO Elon Musk, reported no new purchases or sales of digital assets in its Q3 accounts, just like in Q2. However, under accounting rules for digital assets a company must record an impairment charge if the value of an asset it holds falls during the quarter it is reporting on. Any increase in value is not reported as a gain on the accounts.
Tesla Purchased 41.5 billion Bitcoin
It is reported that because Tesla holds crypto as an 'indefinite-lived intangible asset' the company is required by accountancy rules to record the value of bitcoin at the time of purchase. If the BTC value falls well below the price at the time of purchase, Tesla must write down the value of its holdings as an impairment charge.
It was announced in February that Tesla had purchases $1.5 billion-worth of bitcoin and sales of around 10% of that holding saw Tesla's balance sheet later boosted by some $272 million.
Plans to allow the purchase of Tesla vehicles with bitcoin were suspended in May, amid apparent concerns about the environmental impact of the cryptocurrency. However, over the summer, Musk stated that the plan could 'likely' be resurrected if ecological concerns were addressed.
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