As we all know, there are no absolute winners in the game of trading. You win some, and you lose some. And it seems like company giant Tesla finds itself on the losing side for a change. According to reports, Tesla will probably have to list its Bitcoin (BTC) holdings at a loss. And we have the scoop on this Tesla loss.
And just back in February, Tesla announced its $1,5 billion investment in this so-called “digital gold” coin. Bitcoin was worth around 38,000 dollars at the time. It’s also worth mentioning that the Securities and Exchange Commission (SEC) states that BTC (and other intangible assets) has to be listed as an impairment charge if BTC falls under the value it was bought at.
Seeing how Bitcoin price keeps falling and is around $31,000 at the moment, hitting levels last seen in January, this Tesla loss may mean the company will be facing an impairment charge. In other words, it has to report the drawdown in a disclosure to the SEC.
Some analysts say that anonymous yet reliable sources claim that the impairment charge can lead to a loss between $25 million and $100 million for Tesla on paper. Also, Tesla can’t mark up the Bitcoin price it holds until the position occurs as a sale.
The question on everyone’s minds in the crypto world is: did the electric car company sell any BTC in the quarter to cover some of the losses? We know that Tesla sold 10% of its BTC holdings in Q1 2021, but Chief Executive Officer Elon Musk claimed they did that to prove that BTC is liquid enough to replace holding cash on balance sheets.
Musk has been dividing crypto lovers for a while now. Is he an ally or just another opportunistic capitalist billionaire? Tesla’s interest in Bitcoin investing helped push the coin into record-high levels in never-seen-before rallies.
But then the company did somewhat of a 180 and suspended Bitcoin payments, claiming it was concerned about the environmental impact the famed crypto has due to its tasking mining operations. Moreover, Musk continued to lobby for the Twitter-based Dogecoin, earning the scorn of many crypto enthusiasts.
Adding fuel to the fire, on July 7th, a Reddit user u/StablecoinsFraud started a thread claiming they got a now-deleted screenshot from Musk’s Twitter account. They claim that the eccentric billionaire posted a picture and quickly deleted it. The problem? The picture may have been posted to pump up Bitcoin prices. Coincidence or conspiracy?
As we have mentioned, Bitcoin had quite the roller coaster in recent months. The second quarter of 2021 proved to be the toughest one yet for the cryptocurrency. It fell from record-high levels of more than $63,000 to record-lows of $30,000.
In Q1, Bitcoin saw fantastic returns of 102%, but Q2 brought that number to a meager -40%. Many larger companies began adopting Bitcoin as a payment method amid its surge, so they won’t be pleased with the news. Besides Tesla, other big names that have jumped on the bandwagon were PayPal, Visa, and many more.
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