Elon Musk’s evolving connection with cryptocurrency has taken yet another twist. According to blockchain analytics company Arkham Intelligence, Tesla moved Bitcoin (BTC) worth over $765 million to unidentified wallets.
According to BitcoinTreasuries, Tesla is the fourth-largest Bitcoin holder among U.S. public firms. The company trails behind software firm MicroStrategy and Bitcoin mining companies Riot Platforms and MARA Holdings. Despite this significant holding, Tesla’s BTC accounts for less than 1% of its almost $700 billion market value. In contrast, for the other three firms, Bitcoin represents about 25% or more of their market worth.
Tesla first invested in BTC in 2021, putting $1.5 billion into the crypto. It was a daring move by Musk, who is also well-known for his support of Dogecoin. He had projected that the move would boost the company’s cash returns and enable it to begin taking cryptocurrency payments for its cars. The news caused BTC’s price to jump by over $10,000 at the time.
However, Musk later reversed course in the same year, citing environmental concerns over Bitcoin mining’s heavy reliance on fossil fuels, especially coal. The shift disappointed many in the crypto community, and Bitcoin’s price dropped by more than 10%. Musk did reassure that Tesla had no plans to sell its BTC holdings and would accept cryptocurrency payments once mining processes became eco-friendlier.
The following year, Tesla altered its strategy again, selling most of its BTC holdings at an average price of roughly $20,000. This sale price was about $18,000 lower than what the company initially paid, meaning Tesla sold near the market’s bottom.
Since then, Tesla’s remaining crypto—less than 10,000 BTC—has seen a more than 350% gain in value. If the company had held onto all its initial investment of 43,200 Bitcoins, the value would have exceeded $3 billion when the crypto reached a peak of $73,750.
What Tesla plans to do with its remaining Bitcoin holdings is still unknown, but there are changes on the horizon regarding how cryptocurrency is accounted for. Starting December 15, new accounting rules will require crypto assets to be reported at their fair value on the balance sheet, impacting companies’ net income at the end of every reporting period.
Before the Financial Accounting Standards Board’s (FASB) rules, crypto had to be recorded using “cost-less impairment” models. This meant that companies could only mark the value down if the market dropped but could not reflect increases until the asset was sold.
It remains to be seen how the new reporting rules will impact industry players like Bit Mining Ltd. (NYSE: BTCM) as they conduct their operations through the coming fiscal years.
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