NTB/Carina Johansen via REUTERS
- The value of Tesla's bitcoin holdings fell nearly $1.8 billion last year, a company filing showed.
- It took a $204 million impairment charge on bitcoin, but converted $64 million worth into dollars.
- CEO Elon Musk distanced himself from crypto last year, calling it a "sideshow to the sideshow."
Tesla's bitcoin hoard plummeted by nearly $1.8 billion last year, as Elon Musk's carmaker dumped a big chunk of its holdings and cryptocurrency prices slumped.
The value of its "fair market holdings" in digital assets fell from $1.99 billion at the end of 2021 to $191 million a year later, the company said in a regulatory filing to the SEC this week, a contraction of 90%.
Tesla invested $1.5 billion into bitcoin in the first quarter of 2021, as it said customers could begin using the token to purchase its electric vehicles. It soon reneged on that promise, with Musk blaming the excessive energy requirements for mining it.
But 2022 saw a bloodbath for the vast majority of crypto assets, after a bull rally through most of 2021 where prices peaked. Rising inflation and interest rate hikes dampened the appeal of riskier assets like bitcoin, while the collapse of FTX, the failure of stablecoin Terra and a liquidity squeeze across the crypto industry also weighed on the market.
Bitcoin shed nearly 65% of its value over the year, ending it at about $16,548. Tesla bought the token in the $30,000-to-$40,000 range at the start of 2022.
As crypto assets struggled, Tesla backed away from bitcoin — by July, it had sold 75% of its holdings, CEO Musk said in a quarterly earnings call, He blamed China's COVID-19 lockdowns for the move, saying it increased the need for more liquidity at the EV maker.
Tesla said it took an impairment charge of $204 million on its bitcoin in 2022 as a result of its drop in value. This was partly offset by its decision to convert $64 million worth of the leading crypto into fiat currency, resulting in a net non-cash loss of $140 million on it bitcoin holdings.
Musk referred to Tesla's association with cryptocurrency as a "sideshow to the sideshow" in the earnings call, as he was questioned on the long-term viability of the asset after it struggled against the economic effects inflation.
"We're neither here nor there on cryptocurrency," Musk told investors.
But he added the company was open to increasing its position in the cryptocurrency in the future, and that its selloff "should not be taken as some verdict on bitcoin."
Tesla's current position on bitcoin is likely to be significantly healthier now than at the end of last year. The value of bitcoin has risen more than 40% through 2023 in a sign of returning bullishness for riskier assets after a dour 2022.