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| Bitcoin Devaluation Affects Tesla |
Tesla's latest financial report shows that the company did not buy or sell Bitcoin in the second quarter, but indicated that it lost $23 million in the value of its digital assets.
The company said that the decline in the value of Bitcoin had some impact on its quarterly operating profit. The electric car maker reported net income of $1.14 billion in the second quarter.
The financial report shows that total sales for the second quarter increased by 98% compared to the previous year. Revenue grew from $6 billion in 2020 to $11.9 billion this year.
Tesla attributed most of its growth to increased demand for its electric vehicles, saying: We broke new records in the second quarter of 2021. We've delivered more than 200,000 vehicles. Our net income exceeded $1 billion for the first time in history.
The company said its total revenue was partially offset by increased operating costs and a loss of $23 million in value associated with bitcoin.
Since the company holds Bitcoin as an intangible asset, the rules state that the company must report impairment losses if the price of the asset is below its cost base.
However, the company does not need to report the price of the underlying asset before the position is realized through a sale.
In February, the company announced a $1.5 billion bitcoin purchase, exceeding its research and development budget for the entire quarter.
She said at the time that she could continue to invest in cryptocurrencies. The company announced in late March that investments totaled $2.48 billion in the first quarter due to currency appreciation.
Bitcoin Devaluation Affects Tesla
The company said it netted $101 million in bitcoin sales in the first quarter, which helped push its net income to an all-time high.
In the company's operating accounts, this gain was reported as a decrease in operating expenses, indicating that the company sold money when the price of bitcoin rose during the quarter.
But the price of bitcoin fell more than 40% in the second quarter. As a result, the value of the company's currency has become much lower than it was at the end of the first quarter.
The cryptocurrency peaked at over $63,000 in April. It then fell to less than $30,000 earlier this month. The current transaction price is around $40,000.
Tesla does not treat Bitcoin as a specific market value, which means that if it is sold for profit, it realizes the benefits of profit.
As a result, as long as the company does not sell the tokens, the loss in the value of Bitcoin will not affect profits.
Tesla's operating profit quadrupled to $1.3 billion compared to the same period last year. Revenue of $11.96 billion exceeded analyst expectations.