Tesla records $23M impairment due to Bitcoin drop

On Monday, Tesla announced that the company had a $23 million impairment due to the drop of Bitcoin’s value. The impairment put a slight drag on Tesla’s quarterly operating income.

Back in February, Tesla announced they bought $1.5 billion bitcoin. At the end of March, that investment was then worth $2.8 billion.

However, Bitcoin peaked at $63,000 in April and dropped below $30,000 earlier in July. Bitcoin is currently trading just shy of $40,000.

In Tesla’s operating income, the company reported a net gain of $101 million from sales of Bitcoin. As the gain shows up as a reduction in operating expenses, the report suggests Tesla flipped some of its holdings as Bitcoin prices soared.

Tesla does not account for Bitcoin as a market-to-market asset and thus only recognizes an earnings benefit if it sells to lock in gains. The drop in value should not affect earnings as long as Tesla did not divest its holdings.

Despite the Bitcoin expense, Tesla’s operating income quadrupled to $1.3 billion year over year. Tesla shares rose 1.4% in response to the positive news.

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