Tesla jettisons 75% of Bitcoin holdings, boosting cash balance by $936m Electric vehicle manufacturer Tesla has decided to sell three-quarters of its holdings in Bitcoin just a year after it promoted the "long-term potential" of the controversial cryptocurrency. Along with its latest financial performance, the company announced plans to sell off a significant holding of the blockchain-backed …
So if this was a business making an investment in bitcoin last year and selling it now, is this a loss? Or does this mean that their tax return this year will show a loss and will reduce their taxation payments for a few years?
Maybe if they sold the bitcoin (making a loss) and Musk has bought it personally at current price levels then he'll see a nice profit in a few years if the price goes back to last years levels. For many years now "maybe" has defined bitcoin.
It's pretty simple..
Tesla didn't say exactly why it sold its Bitcoin holdings, but estimates suggest it could take a $460 million hit on the exchange.
Tesla's previously relied on regulatory credits to massage it's results and cashflow. As more competitors produce their own EVs, they won't need to overpay for Tesla's credits. So Tesla's funnymoney sales were only $344M, down 50% from last quarter. It'll be interesting to drill into that. Theory goes you produce 1(?) credit for every EV produced, and have to buy those for non-EVs. If there are more credits hitting the market, obviously the demand and price falls.. Which I suspect is the reason given production figures, ie Tesla didn't produce 50% fewer EVs, so the price per credit has done a bitcoin and tanked.
Then it got $936M cash from flogging crypto, so $1.3bn in cash or 'revenue'. So it reported $621M, but if you exclude bitcoin and credit sales, that would have been ($679m), or an almost $700m loss
Negative cashflow is rarely good for a mature, high-growth tech stock. Especially as the crypto gain is a one-off, and it's cashcow of regulatory credits is going to continue to decline.
That's not how it works at all.
They will take a profit or loss depending on the cost basis for the bitcoin. That may be the acquisition price for the bitcoin, i.e. they bought at $1.5 billion and sold for $1 billion they book a $500 million loss on the sale.
If they "marked to market" and booked a profit on the unrealized gain in their bitcoin holdings (and I thought I read they did just that a couple quarters ago) they would take a bigger loss now. i.e. if they bought it for $1.5 billion, marked it to market in a subsequent quarter at a value of $2 billion (booking a $500 million profit for that quarter) and then sold it for $1 billion they'd book a $1 billion loss on the sale.
Yes, the "marked to market" accounting is the kind of thing that Musk would have pushed for to make things look rosy. Presumably he's been told they're best cutting their losses now before things get even worse.
In terms of Tesla's account, it's not that significant but good to get it done now while profits are still high because there are tailwinds ahead: blaming lockdowns in Shanghai as opposed to ever improving competitors won't work forever.
That's not how it works at all.
I think you're missing the point. Tesla converted bitcoin to dollars, ie cash. If it hadn't, it would have had to book a loss. That's not just based on the value of the bitcoin, but the whole enterprise. As you say though, the cryptoking still appears to have lost a fair chunk from that investment.
$1bn is pocket change? My tightest jeans fall down if I have more than £15 coins in my pocket, I can't imagine the problems poor Elon faces maintaining his dignity, or his love life.
The most beautiful woman I've ever seen said she loved me, and I wanted to marry her, but I suspected she might love me because of my money and influence. I decided to test her, I quit my job and gave up my car, etc. Aye, she dumped me instantly without apology, went back to her fat drab accountant ex.
As a romantic man that was a damn close escape. As a walking appendage to a penis, that was my worst decision. The scientific method is trial and error, Musk has erred and is heading to trial.
$1B does not buy Musk out of his rock solid commitment to pay $44B for Twitter. The only way he can get off with $1B is if he can convince the US government to block the sale (and he has a shortage of friends there). He could get $1B from Twitter if they cancel the deal but that is even less likely than a big birthday bonus from Biden.
Elon will be VERY lucky to get out of his Twitter brain fart for the $1 billion breakup fee.
The legal opinions, as distinct from Elon's fantasy, are that he's on the hook for the agreed purchase price. The concepts of:
- not a leg to stand on
- specific performance (completing the agreed purchase)
are relevant here.
The trial will be in the specialist jurisdiction of Delaware, not on Twitter.
They know what they are doing there - the judge, Delaware Chancellor Kathaleen McCormick, has got form with tossers like Elon.
Just a reminder, Musk is far from the only investor in Tesla, and this loss may have been caused by him, but it's also been incurred by all the other investors too. Whether they're all fanbois who don't really care because they still have blind faith in their guru, or whether they include lots of institutional investors who very much will care is something I don't know, but if it's the latter he may soon be faced with some meetings where the money men tell him to stop clowning about with videos of him smoking weed, pissing about with Twitter, etc and concentrate on properly building the company or put someone else in charge who will.
Unless the "money men" have the voting power to fire him, any threat to "put someone else in charge" is an empty threat. I'm assuming he probably structured it like Zuck did Facebook so he maintains voting control with a minority of stock, if so he can keep clowning around and acting the fool all he wants and there is nothing anyone can do except sell the stock.
Given the rather large drop in Tesla stock since the Twitter deal was announced, I'm guessing some of the "money men" have taken that route.
Sure, they can't make him behave. But Tesla is listed on the Nasdaq and this is all taking place in the Land Of The Lawsuit, so if he's seen to be not taking his responsibility to shareholders properly and actively damaging their investments, he'll find himself being sued by more than the board of Twitter.
The same as Cap's represents America. A diplomat to all digital citizens, a constant reminder not to take anything in live to seriously, and as good a way as any other to enable fools and suckers to empty their life savings into the hands of random strangers. Even when the loss porn mounts, the Mona Lisa smile of the doge, part joy and part surprise, soothes the soul.
Once called the un-killable cockroach of cryptocurrencies, even crypto bros have scratched their heads at it's longevity. The secret is participation, anyone with a nickel can buy into Doge, play around, and watch the numbers go up and down. That was the key when it was 20,000 Doges for that nickel, and will probably hold till it hits a Buck and all the old timers run for the doors. Ironically that may be because the dollar craters before the litecoin based network Doge is built on does. That's because it was born as a joke, and in the fullness of history even it's creator ended up being pranked by their own creation.
It's a useless little dog, but faithful, and often entertaining.
Tesla's making money selling off environment credits to none EV making car companies. But with the EU and UK looking to phase out sales of ICE vehicles within a decade or so, the writing was on the wall for that as a long term money spinner for Tesla, as all car companies are now getting their own lines of EVs out, and eventually the big car manufactures like GM, Ford, Toyota, Peugeot etc will be the ones selling most of the EVs you will see on the road.
I don't know if Tesla own any patents on EVs that might bring in some money from licensing them to other manufactures, but eventually people will realise that Tesla share price is over inflated and it will probably come down.
But as we have seen many times, what Musk says today isn't necessarily what he dres tomorrow. I wonder if those "free" licences are time limited and renewable under different terms in a year of three? On the other hand, if he does try to play shenanigans with those patents, the people licencing them are big boys in the car making business and probably best able to the throw money at ways to work around most or all of them.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2025
