Tesla nets $64 million profit from recent Bitcoin sale, according to filing with SEC

Despite the current bear market, Tesla has managed to net a handsome profit by selling a large portion of its Bitcoin holdings.

As per the company's 10-Q filing with the Securities and Exchange Commission (SEC), Tesla sold 75 percent of its bitcoin (BTC) holding for a total of $936 million. In the process, the electric car company made a profit of $64 million in the second quarter of 2022.

However, in the same filing, Tesla also recorded a $170 million impairment loss on its remaining holdings for the first half of 2022. The company cited "changes to the carrying value" of the company's bitcoin as the reason for the loss.

An impairment loss occurs when the fair market value of an asset (the price it could be sold for on the open market) is less than its purchase price. This is in line with the fact that Bitcoin was hovering around $18,700 at the end of the second quarter, and Tesla's average acquisition cost is estimated to be around $29,000 per BTC.

At the start of 2021, Tesla invested $1.5 billion in Bitcoin. A couple of months later, the carmaker sold 10 percent of its holding to raise cash during COVID-19 shutdowns in China, which is one of its biggest markets. The sale boosted company coffers by $272 million.

Tesla's latest Bitcoin sale has similar motives. In an earnings call, CEO Elon Musk highlighted that the sale should not be seen as a "verdict on Bitcoin". Rather, it was a move to raise money amid liquidity concerns surrounding the COVID-19 lockdown in China earlier this year.

"The reason we sold a bunch of our Bitcoin holdings was that we were uncertain as to when the COVID lockdowns in China would alleviate. So, it was important for us to maximize our cash position," Musk explained. Speaking about Tesla's position on Bitcoin going forward, Musk said that the company is "open to increasing" its Bitcoin holdings in the future.

This is supported by the fact that Tesla retained a quarter of its BTC holding instead of parting with it entirely. "I would not be surprised if Tesla keeps nibbling in Bitcoin when Bitcoin stabilizes, otherwise they would have sold 100 percent," Markus Thielen, Chief Investment Officer at IDEG, told Cointelegraph.

Of course, the move impacted prices, with BTC dipping about 2 percent after the release of Tesla's second-quarter report. Prices later recovered after Musk's reassuring comments on the earnings call. However, market reactions have been rather flat compared to Tesla's initial $1.5 billion BTC investment, which caused a sharp spike of $3,000 in bitcoin prices, taking it to an all-time high of $43,000 at the time.

According to data from Bitcoin Treasuries, Tesla has around 10,800 BTC after its latest sale, which is valued at $228 million, with Bitcoin trading at $21,094.14 at the time of writing.