Tesla’s BTC Strategy Is Working Out According To Annual Reports

Tesla’s BTC strategy seems to be paying off as we can see from the annual reports of the company and we read further today in our Bitcoin news.

Tesla bought $1.5 billion of BTC and the company’s annual reports suggest that the investment has worked out quite well. Tesla’s BTC strategy started one year ago and the reports show that the overall financial return has been worth it. It will be one year since Tesla revealed that it purchased $!.5 billion worth of BTC and the news even sent the market into a frenzy and every time Musk tweeted something, it triggered billion-dollar price swings.

Now, a year later, it is worth asking whether Tesla’s influence on the market has been that huge or have the purchases been actually so good for the company? The short answer is yes. Tesla published its 10-K detailed annual report that all public companies have to file with the SEC. The report shows that as of December 31, Tesla made $128 million in profits by selling BTC bought earlier last year but that it also recorded a loss of $101 million on the position.

This suggests that Tesla’s entry into BTC earned it a net profit of $27 million but due to teh accounting rules around crypto, the story gets much more complicated than this. These accounting rules mean that companies have to record an impairment loss If the BTC price drops below the purchase price even if the price surges back up again. In the meantime, even if the price increases, the company cannot report gains unless they sell their BTC. All of this obscures the value of the company’s crypto holdings especially last year when prices soared. TEsla makes this clear in its reports when it noted the fair value of the asset was worth $2 billion in December which means its position was around $500,000 million. Here’s a paragraph from the report:

“We continue adapting our investment strategy to meet our liquidity and risk objectives, such as investing in U.S. government and other marketable securities, digital assets and providing product related financing. In the first quarter of 2021, we invested an aggregate $1.50 billion in bitcoin. The fair market value of our bitcoin holdings as of December 31, 2021 was $1.99 billion. We believe in the long-term potential of digital assets both as an investment and also as a liquid alternative to cash.”