Tesla (TSLA) Discloses Nearly $2 Billion in Bitcoin Holdings for 2021

Tesla, Inc. (TSLA), the renowned electric vehicle manufacturer, disclosed in an SEC filing on February 7, 2022, that it held Bitcoin assets worth approximately $1.99 billion at the close of 2021. This reflects a 33% increase from the $1.5 billion initially invested earlier that year. The carrying value of Tesla's Bitcoin at year-end stood at $1.26 billion, while the market valuation reached $1.99 billion.

Highlights

• Tesla reported Bitcoin holdings valued at $1.99 billion as of the end of 2021.
• The company initially purchased $1.5 billion in Bitcoin and sold a portion in March 2021, realizing gains.
• Due to fluctuations in cryptocurrency prices, Tesla recorded impairment charges totaling $101 million on its Bitcoin assets throughout 2021.

Strong Confidence in Bitcoin

As one of the few publicly traded companies to maintain Bitcoin on its balance sheet, Tesla’s CEO Elon Musk has consistently expressed optimism about the cryptocurrency. Tesla also accepts Bitcoin payments for select products on its website, reinforcing its commitment to digital assets.

Bitcoin’s price surged to nearly $68,000 in April 2021, prompting Tesla to sell some holdings for $272 million and generate a $128 million profit. However, subsequent declines in crypto prices led to impairment charges of $51 million and $23 million in Q3 and Q2 2021, respectively. The full-year impairment charge summed to $101 million.

Looking ahead, Tesla may face additional losses as Bitcoin prices retraced by nearly 50% in 2022 amid a market shift towards reducing risk exposure amid rising interest rates.

Nonetheless, Tesla remains steadfast in its Bitcoin strategy. The company affirmed in its filing, "We believe in the long-term potential of digital assets both as an investment and as a liquid alternative to cash." Tesla plans to adjust its digital asset holdings in response to evolving market and environmental factors.

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