Tesla Records Bitcoin Impairment Despite Q3 Profit

On Wednesday, the electric carmaker company Tesla Motors, Inc, announced its Q3 2021 earnings report, and as usual, its revenue well to $13.76 billion from $8.77 billion (Q3 2020), representing a 57 percent surge, with $1.62 billion for the quarter income.

However, a Bitcoin-related impairment charge of $51 million hit its digital assets, pushing it down from $1.31 billion (Q2) in digital assets to $1.26 billion.

The last time that the electric carmaker acquired digital assets was in the first quarter, precisely in February, when it announced the purchase of a bulk $1.5 billion in Bitcoin before it sold 10 percent of its total holdings, which is disclosed in April. Since February, there have been no new purchases of digital assets.

The U.S. Financial Accounting Standards Board beliefs that Tesla holds crypto as an “indefinite-lived intangible asset.”

As such, the company is expected to record the value of Bitcoin at the time of purchase, and peradventure, the asset falls well below the carrying value at the time it was purchased. The company would need to write down this value as an impairment charge. 

About five months ago, the electric carmaker halted the adoption of Bitcoin payment for its vehicles purchases due to the environmental effect of Bitcoin mining and processing cryptocurrency transactions. Fast forward to July, the CEO of Tesla, Elon Musk, indicated that the company might reconsider adopting crypto payments again. 

Musk recently shilled meme-based cryptocurrency Dogecoin, and that sent the asset price up on Oct. 14. 

According to its Q3 2021 earnings report, the electric carmaker manufactured around 238,000 vehicles and delivered over 240,000 vehicles in Q3. They recorded an operating margin of  14.6 percent.

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