Analysts think Tesla may be forced to disclose a paper-drawdown of between $25 million and $100 million on its $1.5 billion Bitcoin investment due to reporting rules.
With Bitcoin‘s price lately plummeting to levels last seen in January, CNBC business expert Kate Rooney said on July 6 that Tesla might face an impairment penalty, forcing it to explain the decline in a filing with the US Securities and Exchange Commission (SEC).
Tesla’s $1.5 billion in Bitcoin transactions were first revealed in February, and many believe the electric car maker was in the red by the end of the quarter.
Tesla, according to Rooney, treats cryptocurrency as an intangible asset. As a result of accounting regulations, when Bitcoin’s value falls below a specific threshold, firms must write it off in their financial accounts. Tesla claims that if the price of Bitcoin goes below the carry cost or the price at which Tesla purchased it, at any point after they bought it, an impairment cost is recognized.
According to the analyst, anonymous sources estimate that the impairment charge will cost Tesla between $25 million and $100 million on paper.
Elon Musk, the CEO of Tesla, has been a divisive figure in the crypto world in recent months. The company’s Bitcoin investment and support for BTC payments are helping to catapult the currency to new all-time highs.
However, due to Musk’s continuous Twitter-based Dogecoin preaching and Tesla stopping BTC payments due to worries about the environmental effect of mining, the business billionaire has fallen out of favor with most of the crypto community.
As of this writing, Reddit user “StablecoinsFraud” has uploaded a screenshot of a tweet Musk allegedly deleted after it caused BTC prices to rise. “Elon Musk has deleted a post he posted last night that pumped the Bitcoin price. Someone in his ear?” they penned