Homecryptocurrency News

    Tesla could lose $90 million as Bitcoin dives below $30,000

    Tesla could lose $90 million as Bitcoin dives below $30,000

    Tesla could lose $90 million as Bitcoin dives below $30,000
    Profile image

    By CNBCTV18.com  IST (Updated)


    China's recent crypto crackdown set off the crash in Bitcoin, Dogecoin and Ethereum values.

    It is common knowledge that Tesla boss Elon Musk is a huge crypto fan. His tweets often cause ripples in the global cryptocurrency market. But his electric vehicle company Tesla is facing a loss of $90 million in the second quarter after Bitcoin’s price dropped below $30,000 on June 23.
    Tesla is one of the few companies which has a sizeable holding of Bitcoins. It has around 42,000 bitcoins on its balance sheets, impacting its profit and loss. Tesla bought these Bitcoins for $1.33 billion, when they were valued at $31,620 per coin.
    Tesla’s Bitcoin holdings were valued at $2.84 billion (when Bitcoin’s price was around $59,000) as on March 31, 2021, as per its first quarter earnings report. The company reaped returns of more than 80 percent on its investment within the span of 11 weeks.
    After Bitcoin’s price dipped to $28,814 on June 23, Tesla’s books will reflect a loss of $90 million. Even if Bitcoin prices recover by June 30, the Musk-led company will have to show the loss as ‘impairment costs.’
    To square off its recent losses, Tesla may have to sell off a portion of its Bitcoin holdings at a premium in the next quarter.
    Earlier, business analytics company MicroStrategy -- Bitcoin’s biggest corporate investor -- had warned that it expected to lose at least $284.5 million in the second quarter.
    The top cryptocurrencies by market value -- including Bitcoin, Ether and Dogecoin -- started to crash on June 22, following news of a crackdown in China, CNBC reported. China accounts for as much as 65-75 percent of the world’s Bitcoin mining, which is significant in the context of the entire crypto ecosystem.
    On June 23, Bitcoin prices returned to $30,000 levels to recover from five-month lows due to value buying at lower levels.
    Musk has been shaking up the crypto world with his outbursts and flip-flops on Twitter. Earlier, he had expressed his love for Bitcoin and then for Dogecoin, even calling himself "Dogefather." However, he also raised concerns about the high energy requirement of crypto mining and came out in support of environmentalists.
    In mid-June, Bitcoin had jumped above $39,000 after Musk said Tesla Inc would resume transactions with the cryptocurrency when mining is done with cleaner energy. MicroStrategy’s billionaire CEO Michael Saylor continues to be a big Bitcoin bull and sought to raise more debt to double the company’s volatile Bitcoin investment.
    Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
    arrow down

      Most Read

      Market Movers

      View All