Tesla gained $64m on Bitcoin Sales in the second quarter

Tesla gained $64m on Bitcoin Sales in the second quarter

Tesla (TSLA) recorded a profit of $64 million on the sale of its 75% Bitcoin (BTC) holdings that obtained it $936 million in the second quarter, as well as an impairment expense of $170 million on its remaining holdings, according to its 10-Q quarterly filing with the Securities and Exchange Commission (SEC) on Monday.

 

The quarterly filing explained on information and statements provided in Tesla’s quarterly earnings release and conference call on Wednesday.

 

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On the earnings call, Tesla Chief Financial Officer (CFO) Zach Kirkhorn noted that the company converted a majority of its bitcoin holdings to fiat (USD) for a realized gain, offset by impairment expense charges on the remainder of its holdings, netting a $106 million cost to its Profit and Loss Statement included within restructuring and other costs.

 

 

In its 10-Q quarterly filing on Monday, Tesla said it logged the $170 million impairment expense charge and $64 million gain in the six-month period ending June 30. Because it didn’t increase to or reduce any of its BTC holdings in the first quarter, nor did it record an impairment expense charge then, all those results have occurred in the second quarter of the current financial year.

 

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Tesla first purchased $1.5 billion worth of Bitcoin (BTC) in the first quarter of 2021 but did not disclose its weighted average purchase price. Later in the first quarter of 2021 the firm cut its bitcoin holdings by 10%, a sale that boosted that quarter’s earnings by $272 million. It hadn't increased to or reduced its BTC holdings until the second quarter of 2022, a move CEO Elon Musk explained was taken to raise cash in the face of COVID-19 lockdowns in China, one of the Tesla’s largest markets.

 

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The firm did not reveal the selling price for its bitcoin holdings in the second quarter but a rough calculation shows the weighted average selling price would be of around $29,000 per bitcoin, helping the company avoid a much more substantial impairment expense charge. Bitcoin ended the second quarter at a value of about $18,700.