Tesla may be backtracking on its belief in the long-term benefits of investing in Bitcoin after losing over $200 million on the investment last year. The language that has appeared in past 10-K documents filed by the automaker that seems to show a bullish attitude toward investing in cryptocurrencies is no longer there.
Early in 2021, Tesla announced it invested an aggregate $1.50 billion in Bitcoin while temporarily accepting the crypto as a form of payment on some products. Tesla had detailed a “long-term belief” in digital assets in filings in past 10-K filings:
“We believe in the long-term potential of digital assets both as an investment and also as a liquid alternative to cash.”
This statement was most recently seen in Tesla’s 10-K for the 2021 calendar year.
However, this language has disappeared from Tesla’s most recent 10-K, which was released this morning:
“For example, in the year ended December 31, 2022, we recorded $204 million of impairment losses resulting from changes to the carrying value of our bitcoin and gains of $64 million on certain conversions of bitcoin into fiat currency by us.”
Last year, Tesla recorded impairment losses of $101 million, with gains of $128 million “on certain conversions of bitcoin into fiat currency” by the company.
In the past year, Bitcoin’s value has dropped by 40 percent. It has rebounded nicely so far in 2023, regaining over $6,500 so far this year. Currently, it is trading at $23,109.60.
Last year, CEO Elon Musk revealed Tesla had sold a considerable amount of its Bitcoin, favoring cash holdings due to tough economic conditions:
“It should be mentioned that the reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the COVID lockdowns in China would alleviate…So it was important for us to maximize our cash position, given the uncertainty of the COVID lockdowns in China.”
Musk reiterated the importance of having cash on hand during difficult economic conditions during the company’s most recent Earnings Call, which took place last week.
“I think if we see a severe recession this year, which, like I said, hopefully, we don’t, in severe recessions, cash is king big time because it’s in such short supply,” Musk said.
While Tesla’s move to sell 75 percent of its Bitcoin last year was a move to keep the company’s cash situation strong, it seems the belief in crypto may be withering based on the removal of the long-term belief phrasing in its SEC filings.
Tesla experienced considerable gains early in its investment as the crypto ballooned in value initially. However, the price increased by 77 percent in Q1 2021 when Tesla initially invested. The crypto peaked in value at the tail end of that year, reaching levels of over $64,000 per unit.
Disclosure: Joey Klender owns $TSLA. He is not a Bitcoin investor.
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