Tesla Retains $1.3bn Bitcoin Holdings in Q2 Amid Impressive Earnings

Despite stating concerns about environmental impacts, Elon Musk's Tesla revealed it has held on to its bitcoin holdings.

Tesla in its second-quarter earnings report released on Monday stated that it neither sold nor bought any digital assets, and still holds $1.3 billion in bitcoin.

In Feruary this year, the electric carmaker announced that it had bought $1.5 billion worth of bitcoin. Later in the first quarter of the year, the company shed its bitcoin holdings by 10 percent, a sale that boosted its Q1 earnings by $272 million.

During the recently held B Word conference, Elon Musk also revealed that one of his privately-owned companies, SpaceX, holds bitcoin.

The company reported that produced and delivered over 200,000 vehicles, achieved an operating margin of 11.0% and exceeded $1B of GAAP net income for the first time in its history.

Despite the bitcoin expense, Tesla’s operating income quadrupled to $1.3 billion from the same period a year earlier. Revenue also reached $11.96 billion and earnings per share stood at $1.45.

The electric auto company only referred to bitcoin or crypto one time in its second-quarter announcement. The subject didn’t come at all on Tesla’s conference call with investors and analysts.

Tesla however reported a $23 million impairment on its bitcoin holdings. This is because bitcoin is considered an inventory asset, which means that under Generally Accepted Accounting Principles its value is recorded at the lowest price bitcoin hit in the quarter. 

Tesla doesn’t account for bitcoin as a mark-to-market asset, meaning it only recognizes an earnings benefit if it sells to lock in the gains. Therefore, the drop in the value of bitcoin shouldn’t affect earnings as long as Tesla hasn’t divested of any of its holdings.

In May, Elon Musk announced that Tesla would no longer accept bitcoin payments for its products due to environmental concerns over bitcoin mining’s use of coal and other fossil fuels. Earlier this month, however, Musk said bitcoin’s environmental profile is improving and that Tesla would likely resume accepting bitcoin for payments.