Elon Musk and Tesla Still Hold Bitcoin

Through the fourth quarter, the EV leader maintained its Sept. 30 stake in bitcoins -- but their value melted.

The news will undoubtedly delight cryptocurrency and bitcoin fans. 

Through the fourth quarter Tesla and Elon Musk kept the bitcoins they'd had left at Sept. 30 on the electric-vehicle leader's balance sheet.

At the beginning of 2021 the group provided a much needed vote of confidence to the young industry powered by blockchain technology, which wants to disrupt the traditional financial system. 

Musk said in February of that year that Tesla  (TSLA) - Get Free Report had invested $1.5 billion in bitcoin. It purchased more than 43,200 bitcoins for around $30,000. 

The bet quickly paid off as bitcoin's price soared to a record $69,044.77 on Nov. 10, 2021, amid the crypto craze. But the crypto market's collapse has rattled most players, even its evangelists. Crypto has lost almost $2 trillion after hitting an all-time high of $3 trillion.

Bitcoin has lost two-thirds -- almost 67% -- of its value, trading around $23,000 at last check, according to data firm CoinGecko. 

Tesla had managed to limit the damage by selling a large part of its bitcoin stake before prices fell below its purchase price. Tesla said last July that it had sold 75% of the 42,000 bitcoins it had held on April 1.

Value of Tesla's Bitcoin Has Fallen to $184 Million

"We have converted approximately 75% of our bitcoin purchases into fiat currency," the maker of the Model Y and Model 3 said at the time. 

It "recorded $170 million of impairment losses resulting from changes to the carrying value of our bitcoin." The company recorded a net loss of $106 million on its bitcoin bet.

The bitcoins left on its balance sheet were valued at $218 million. At the end of September, the value of these bitcoins had not changed because the prices of the most popular cryptocurrency had not moved much in Q3 2022. Bitcoin prices remained almost stable (-0.7%) between June 30 and Sept. 30.

This was not the case, however, in Q4. Bitcoin prices lost 15% in the quarter through year-end.

Digital-currency fans would be happy to hear that Tesla and Musk didn't sell their bitcoins during this tough time. But on the other hand the value of their bitcoins has sharply declined, according to the financial documents the company published on Jan. 25 as part of its fourth-quarter results.

Tesla indicates that the value of its bitcoins went from $218 million at Sept. 30 to $184 million on Dec. 31, an asset depreciation of the order of $34 million, or 16%.

No surprise here: Tesla in November had warned in a regulatory document that the prices and total value of these digital assets would fluctuate.

"The prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties," the company said in the regulatory filing. 

"For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable."