Tesla lost $140 million on Elon Musks Bitcoin bet last year

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Photo: Michael González (Getty Images)

Tesla’s big, bold $1.5 billion bet on bitcoin’s long-term potential is starting to look more and more like a dud. The company, at the behest of CEO Elon Musk, purchased $1.5 billion worth of cryptocurrency in February. Now, according to new SEC filings, the company says it walked away with $140 million in bitcoin losses in 2022, down nearly 10%. It seems that even the most valuable automaker in the world cannot escape the effects of last year’s grueling crypto winter.

In total, Tesla says it incurred $204 million in bitcoin writedowns last year, though it was able to earn around $64 million by converting some of the crypto into fiat currency. These impairment charges, in this context, likely refer to the dramatic loss in value associated with Teslas crypto holdings. To put that into perspective, bitcoin was trading at over $45,000 per coin the day Tesla revealed its investment. On February 1, 2023, almost two years later, bitcoin was trading at just $23,148. All in all, a 10% loss might not be that bad.

During the year ended December 31, 2022, we recorded $204 million of impairment losses resulting from changes in the carrying value of our bitcoin and gains of $64 million on certain conversions of bitcoin into fiat currency by us, Tesla said in its filing.

These lackluster numbers put a damper on what was once a tidal wave of bitcoin hype emanating from Tesla, and more importantly, its CEO. Months after revealing Tesla’s initial crypto investment, Musk announced that his company would begin accepting payments for vehicles in bitcoin. At the time, Musk told customers interested in securing a Tesla with crypto that bitcoins paid to Tesla would be kept as bitcoins and not converted into fiat currency. It is unclear whether or not the recently converted Tesla bitcoin included payments paid by customers. Tesla finally backed out of accepting bitcoin after critics railed against the electric vehicle maker for its alleged complicity in a notoriously energy-intensive cryptocurrency mining operation.

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Cryptocurrency is a great idea on many levels and we think it has a bright future, but it can’t come at a high cost to the environment, Musk wrote on Twitter.

Last year, following its second-quarter earnings reports, Tesla said it had converted 75% of its bitcoin holdings into fiat currency, ultimately offering the company an additional $936 million in cash. This rapid withdrawal from his investment came after bitcoin reportedly lost more than half of its value in the previous four months. Although prices have been swinging up and down since then, the overall cryptocurrency landscape has arguably deteriorated further, thanks in part to the epic implosion of cryptocurrency trading platform FTX and the arrest of its founder Sam Bankman-Fried. The ripple effect of this coup caused other major players, like Genesis and BlockFi, to file for bankruptcy.

Musk has repeatedly insisted that it’s absurd to believe that his tweets, another public statement, could have a meaningful effect on the markets, but his own Bitcoin saga seems to tell a different story. Bitcoin prices hit record highs in 2021 when Tesla announced its massive $1.5 billion investment. Bitcoin prices then suddenly dropped by 15% immediately after Musk halted Tesla bitcoin payments. In other cases, seemingly innocuous tweets from Musk, like this stupid meme describing the billionaire’s breakup, preceded bitcoin price declines of around 5%.

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