Elon Musk’s interesting relationship with cryptocurrencies has taken a new turn. According to blockchain analytics platform Arcam Intelligence, the company moved approximately $765 million worth of Bitcoin to unknown wallets. It’s unclear whether the EV maker, which is the fourth-largest Bitcoin holder among U.S. public companies, has any plans to sell, according to BitcoinTreasuries.
Tesla did not immediately respond to requests for comment or confirmation of the transfer. Among U.S. publicly traded companies, only software company MicroStrategy and bitcoin mining companies MARA Holdings and Riot Platforms hold more cryptocurrencies.
But Tesla’s Bitcoin accounts for significantly less than 1% of its roughly $700 billion market capitalization. For the other three companies, cryptocurrencies account for approximately 25% or more of their respective valuations.
Tesla’s foray into Bitcoin
Tesla originally invested $1.5 billion in Bitcoin in 2021. It’s yet another show of bold risk tolerance for Musk, who is now a well-known fan of the meme coin Dogecoin, who believes the investment maximizes the company’s cash return and allows virtual It was predicted that it would help accept currency payments. That vehicle. The announcement sent the price of Bitcoin soaring by more than $10,000.
However, later that year, Musk backed off, citing concerns about Bitcoin mining’s intensive use of fossil fuels, including coal. This decision angered many crypto fans as Bitcoin fell by more than 10%. However, Musk said the company would not sell any cryptocurrencies and that Tesla would accept Bitcoin payments once mining became more environmentally friendly.
However, the summer of 2022 brought further changes to Tesla’s crypto strategy, with Tesla offloading a large portion of its Bitcoin at an average price of around $20,000. That’s about $18,000 less than what I originally paid. The company ultimately sold at rock-bottom prices.
Tesla’s remaining Bitcoin (less than 10,000 BTC) has appreciated more than 350% since then. The original investment of 43,200 BTC would have been worth more than $3 billion when Bitcoin reached its recent high of $73,750.
The fate of Tesla’s remaining shares remains unclear. However, it is worth noting that new accounting requirements for cryptocurrencies will soon come into force. As of December 15, holdings of crypto assets must be measured at fair value on the balance sheet, with changes reflected in net income at the end of each reporting period.
Before the Financial Accounting Standards Board (FASB) issued these new guidelines last year, Bitcoin was required to be accounted for using a “no-cost impairment” model. In other words, due to changes in market value, virtual currencies can only fall in value, never rise in value. In other words, the profit will only appear on the balance sheet after the digital asset is sold.
But even if Tesla doesn’t get rid of Bitcoin, it doesn’t matter anymore.
