Cryptocoin

Tesla owned by Elon Musk faces a significant bitcoin crash, suffers $140 Million BTC loss

In February 2021, Tesla announced its desire to sell autos using Bitcoin, causing the cryptocurrency’s price to rise, while also purchasing $1.5 billion in the cryptocurrency. At the time of the investment, one BTC was worth approximately $43,000. Tesla CEO Elon Musk was then fairly optimistic about the cryptocurrency’s future, noting that the company believes in the “long-term potential” of digital assets as a “investment and liquid alternative to cash.” Bitcoin reached historic highs of almost $70,000 by October, thanks in part to the billionaire’s fervent support for cryptocurrency. However, the bear market will eventually rear its ugly head and disrupt the environment. Forward to February 1st, 2023, and Bitcoin is trading at $23,133, having lost more than half its value from its all-time peak in the autumn of 2021.

The phrase “impairment” refers to a decrease or loss in the value of an item. It could be caused by a change in economic conditions, such as the bear market that rattled the market following Terra Luna’s implosion in May. Tesla has changed language from past annual reports that appeared to reflect an enthusiastic outlook on bitcoin investment. Tesla reported a $204 million gross impairment loss on its Bitcoin assets in 2022 in a regulatory filing with the US Securities and Exchange Commission on Tuesday.

“During the years ended December 31, 2022 and 2021, we recorded $204 million and $101 million of impairment losses on such digital assets,” Tesla stated in its most recent filing. We earned gains of $64 million and $128 million in the fiscal years ended December 31, 2022 and 2021, respectively.” Despite dropping almost 70% of its value, some market experts predict bitcoin has remained resilient and may recover, particularly when consumers who are intimidated by the crypto market migrate to more developed ecosystems such as Bitcoin and Ethereum (ETH).

Tesla was one of the first firms to invest heavily in bitcoin. The company stopped accepting BTC payments for vehicle purchases in May 2021, as it began to lose faith in its investment due to the cryptocurrency’s high energy consumption. According to a 2021 SEC filing, Tesla’s impairment losses have virtually doubled since 2021, when the carmaker declared a $101 million impairment on digital assets and a $128 million gain from the sale of Bitcoin. Over the last year, the cryptocurrency market has witnessed a severe decline. Bitcoin is currently trading at $23,045.50, or 66% below its all-time high of $68,789.63. Despite dropping more than half its value, some analysts believe bitcoin has remained durable and may make a comeback, particularly when consumers frightened by the crypto market in general migrate for household brands and more mature ecosystems, such as bitcoin or ether.

Meanwhile, Elon Musk has previously stated that Tesla owns Dogecoin (DOGE), albeit the actual quantity is unknown. Tesla, headquartered in Austin, Texas, has never acknowledged a DOGE transaction, yet the meme coin is accepted as payment for some of the company’s online-only merchandise. Musk has previously stated that he personally owns Dogecoin, but he has not stated that Tesla does, despite the fact that the electric car firm has been accepting Doge payments for some products on their website. It’s unclear whether the corporation has just kept the tokens used for merchandising or has made specific purchases of the dog-themed “joke” cryptocurrency that Musk has often expressed support for on Twitter.