Tesla’s bitcoin holdings plummeted nearly $1.8 billion last year as Elon Musk called crypto a ‘sideshow’
- The value of Tesla’s bitcoin holdings fell nearly $1.8 billion last year, according to a company filing.
- It took a $204 million impairment charge on bitcoin, but converted $64 million into dollars.
- CEO Elon Musk distanced himself from crypto last year, calling it “sideshow to the sideshow.”
Tesla’s bitcoin hoard plummeted by nearly $1.8 billion last year as Elon Musk’s automaker dumped much of its holdings and crypto prices tumbled. currencies fell.
The value of its “equitable holdings” of digital assets rose from $1.99 billion at the end of 2021 to $191 million a year later, the company said in a statement. regulatory filing with the SEC this week, a contraction of 90%.
Tesla invested $1.5 billion in bitcoin in the first quarter of 2021 as it said customers could start using the token to purchase its electric vehicles. He quickly went back on this promise, with Musk blames excessive energy requirements for exploiting it.
But 2022 has seen a bloodbath for the vast majority of crypto assets, following a bullish rally through most of 2021 where prices peaked. Rising inflation and interest rates dampened the appeal of riskier assets like bitcoin, while the collapse of FTX, the failure of stablecoin Terra and a liquidity squeeze in the banking industry crypto also weighed on the market.
Bitcoin lost almost 65% of its value over the year, ending it at around $16,548. Tesla bought the token in the $30,000 to $40,000 range in early 2022.
As crypto assets struggled, Tesla moved away from bitcoin – in July it had sold 75% of its stakessaid CEO Musk in a call for quarterly resultsHe blamed China’s COVID-19 lockdowns for the move, saying it increased the electric vehicle maker’s need for more cash.
Tesla said it took a $204 million impairment charge on its bitcoin in 2022 due to its decline in value. This was partly offset by his decision to convert $64 million of the leading crypto into fiat currency, resulting in a net non-cash loss of $140 million on his bitcoin holdings.
Musk called Tesla’s association with cryptocurrency a “sideshow” in the earnings call as he was asked about the asset’s long-term viability after battling inflation from economic effects .
“We are neither here nor there on cryptocurrency,” Musk told investors.
But he added that the company was open to increasing its position in cryptocurrency in the future, and that its sale “should not be taken as a verdict on bitcoin.”
Tesla’s current stance on bitcoin is likely to be significantly healthier now than at the end of last year. Bitcoin’s value has risen more than 40% through 2023, signaling a return to the upside for riskier assets after an austere 2022.
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