As with anything Tesla, I'm seeing lots of comments containing false information getting upvotes, saying they “bought high and sold low” or made a big loss on their Bitcoin. I just wanted to clarify that this is not the case:
Tesla sold 10% of their total BTC in March 2021 as a liquidity test at a profit (~$100M as per their 10Q). Then they sold 75% of their remaining BTC this quarter in May, at around the same price they bought it for. On the EC they mentioned they made a slight profit, but it was offset by their impairment.
As for that, the way BTC accounting works is that you are not allowed to recognise any profits until you sell. So if you buy at $10k and BTC goes to $100k, the profit in your books is $0. Once you sell, you are allowed to recognise that profit.
On the other hand, if it drops below your “carrying value”, you do need to recognise that impairment. So if you bought for $10k and it drops to $5k, you need to take a $5k loss on your earnings. If after that it goes back to $10k, you're still “carrying” it for $5k until you sell. You're not allowed to recoup your losses in the books until you sell. If at any point it goes below the lowest it's been while you were holding it (so $5k in this example), you again need to take an impairment in your books. As a result, Tesla had to mark down their carrying value in Q3 2021 as BTC dropped to ~$30K, which was their carrying value until Q2 and right around where they sold.
So in short, they made a small profit on the 75% they sold this quarter, but because the other 25% dropped roughly 35% below their carrying value (to $17,760), generating a ~$115M impairment (again, can just calculate this based on the earnings report), that offset the gains from the other 75%. Overall, they're still up roughly $100M from their first sale and another $60M from the remaining 25% because BTC is now ~30% higher than their carrying value.
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