Elon Musk's Tesla Suffered Multi-Million Loss From Bitcoin Holdings In 2022

American electric vehicle maker Tesla owns more Bitcoin (BTC) than eight of the top 10 corporate holders, but in its SEC filings, it reported a whopping $140 million loss last year, recording the company's impairment loss to almost double since last year.

Tesla, like the enterprise analytics platform Microstrategy, is one of the top corporate Bitcoin holders and despite the crypto winter and bull run last year, the electric vehicle maker opted to hold on to the crypto assets instead of selling them all off.

In a filing with the Securities and Exchange Commission (SEC) on Jan. 31, Tesla disclosed that it had recorded a gross impairment loss of $204 million to Bitcoin in 2022.

"Digital assets are considered indefinite-lived intangible assets under applicable accounting rules. Accordingly, any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale," the SEC filing read, explaining the significance of highly volatile crypto prices on the company's net profit.

"For any digital assets held now or in the future, these charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase," the filing stated.

Tesla also recorded a gain of $64 million from converting BTC into fiat currency in several instances in the previous year, which resulted in a net loss of $140 million from cryptocurrency trading activities.

In a report released in October 2022, Tesla revealed that it still maintains the same amount of Bitcoin, around $218 million at the time, which is the same as it was during the company's second-quarter report, underlining its unwillingness to sell its holding of the world's largest crypto asset by market capitalization.

Tesla purchased $1.5 billion in Bitcoin in 2021 and has not purchased any more since. It sold 75% of its Bitcoin holdings in the second quarter of 2021, which was equivalent to around $936 million at the time.

According to Musk, the decision was made due to "the uncertainty of the COVID lockdowns in China."

Bitcoin has been trading in the green zone since the start of 2023.

The world's first crypto asset saw a 3.47% gain over the past 24 hours and was trading up $23,909.12 with a 24-hour volume of $29,638,277,956 as of 10:21 p.m. ET on Wednesday, according to the latest data from CoinMarketCap.