Tesla writes off $23m in Q2 amid negative Bitcoin dynamics

Tesla, in the April–June period, reported net income of $1.14 billion on revenue of $11.96 billion. The $23 million impairment resulting from the negative performance of its on-balance-sheet 42,902 BTC did not materially affect the results.

Earnings per share of $1.45 and revenue of $11.96 billion beat market expectations of $0.98 per share and $11.3 billion, respectively. Following the results, the stock rose 2%.

The electric-vehicle maker invested $1.5 billion in Bitcoin in February. Later, Elon Musk called the move “quite risky”.

A month earlier, the company updated its investment policy, reflecting a more flexible approach to diversification and to maximising returns on funds not required to support ongoing operations.

The average purchase price of Bitcoin in February was $34,963. Bitcoin traded at roughly the same levels at the end of Q1.

A $23 million impairment was recorded in Tesla’s second-quarter results under the “restructuring and other” line item within operating expenses.

At the subsequent earnings call, which also included Tesla’s chief financial officer Zachary Kirkhorn, the topic of Bitcoin was not raised.

After Bitcoin hit an all-time high in April, a tendency emerged for Tesla’s shares to lag the Nasdaq 100. The strongest correlation between Bitcoin and the automaker’s shares occurred during the period the May drop to $30,000. Subsequently, as Wall Street reached new highs, this link weakened.

At The B Word conference Musk said he owns Bitcoin, Ethereum and Dogecoin. SpaceX invested in Bitcoin.

In late March Tesla began selling EVs for Bitcoin, and in late April disposed of part of its digital gold for $272 million.

On May 13, the company suspended sales of electric vehicles for the primary cryptocurrency due to concerns about the environmental footprint of mining. At The B Word, Musk suggested the option could be reintroduced as mining became more environmentally friendly.

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