The Dumping of Bitcoin by Tesla Is Causing an Accounting Enigma
Tesla Inc. made headlines this week by dumping most of its Bitcoin. Elon Musk’s electric vehicle startup sold 75% of its cryptocurrency for a one-time cash injection, but its remaining Bitcoin hurt profitability.
Tesla’s financial report makes it tough to determine how crypto affected its bottom line. Current accounting rules—or lack thereof—are crucial.
The shareholder letter tells us: The transaction contributed $936 million to its balance sheet, but impairments affected income.
As of June 30, the company’s digital assets were valued at $218 million, down more than a billion from the previous quarter.
The business reported a $922 million “depreciation, amortization, and impairment” charge but didn’t break it out. The 30-page, 9-image slideshow references Bitcoin twice.
Wednesday’s teleconference included Tesla updates. CFO Zachary Kirkhorn said a write-down reversed Bitcoin’s gain. Tesla was reorganizing, said Kirkhorn.
The shareholder letter claims $142 million in restructuring charges, but the business doesn’t elaborate. The shareholder letter doesn’t mention $106m. Tesla wouldn’t comment.
Tesla’s Missing Data
This lack of information may or may not be addressed when the firm files its 10-Q in the coming days.
Tesla isn’t required. GAAP doesn’t require corporations to disclose digital assets and cryptocurrencies in financial statement footnotes. Bitcoin is intangible, according to the AICPA.
Digital assets are registered at historical cost minus depreciation. Price declines are disclosed, but not recoveries. Companies must disclose digital asset paper losses.