Tesla logged a $101 million impairment loss from bitcoin in 2021 as the cryptocurrency’s value fluctuated

• Tesla said in an SEC filing Monday it recorded about $101 million in impairment losses from its bitcoin holdings in 2021. 
• The company also gained $128 million in sales of the world’s most-traded cryptocurrency. 
• Tesla invested $1.5 billion in bitcoin in 2021, and the fair market value of its holdings ended the year at $1.99 billion. 
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Tesla recorded impairment losses of about $101 million last year to reflect value changes in its holdings of bitcoin, according to a regulatory filing by the electric vehicle maker on Monday. 

The company outlined its dealings with the world’s most-traded cryptocurrency in a 10-K annual financial performance report with the Securities and Exchange Commission. 

In 2021, “we recorded approximately $101 million of impairment losses resulting from changes to the carrying value of our bitcoin and gains of $128 million on certain sales of bitcoin by us,” Tesla said. 

An impairment charge represents a decline in the carrying value of a specific asset on a company’s balance sheet.

Tesla said the $128 million in gains stemmed from selling a portion of its holdings in March 2021. 

The company made an initial $1.5 billion investment in the digital asset in January 2021. Those holdings were worth about $500 million more by the end of 2021 as Tesla said the fair market value was $1.99 billion.

Bitcoin’s price climbed by about 60% last year to trade above $46,000. 

“We believe in the long-term potential of digital assets both as an investment and also as a liquid alternative to cash,” according to Monday’s filing. Tesla last year said it had updated its investment policy to provide itself with more flexibility to continue diversifying and maximizing returns on cash that was not required to maintain adequate operating liquidity. 

Tesla for a while last year accepted bitcoin as a payment option but CEO Elon Musk said it halted the practice in May, citing environmental concerns “about the rapidly increasing use of fossil fuels” for bitcoin mining and transactions. He later said Tesla would resume crypto payments when mining is cleaner.

Tesla isn’t the only company to record a bitcoin-related impairment charge. Business enterprise software maker MicroStrategy earlier this month logged a $146.6 million charge for its bitcoin holdings for the fourth quarter of 2021.

Bitcoin’s price so far in 2022 has declined about 7% and traded close to $43,000 on Tuesday.