Tesla loses about $650 million due to Bitcoin

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Tesla is facing an estimated loss of $650 million from the value of its investment in Bitcoin after a significant decline in the value of the cryptocurrency.

Tesla bought $1.5 billion worth of bitcoin early last year in a drastic move that made it the largest company to transfer a portion of its cash reserves into cryptocurrency.

But the automaker’s bet turned out to be a huge loss in recent months as Bitcoin crashed to an 18-month low.

Bitcoin is trading at about $19,000, making the company’s investment estimated at $822 million. This comes after the company recorded the value of its bitcoin holdings at $1.26 billion three months ago.

While the property’s market value was close to $2 billion, accounting practices mean the company does not record a gain on its investment until it sells.

This means that Tesla is likely to post a drop in its bitcoin holdings of around $650 million when it reports quarterly results later this month.

The cryptocurrency is down 60% from $46,700 at the start of the year and nearly 75% from its November high.

Rising interest rates and inflation have dampened interest in digital assets. Prices have also been affected by a series of crises in crypto companies.

Tesla briefly accepted bitcoin as a payment method last year. This was a concern that many members of the company’s community were talking about when Tesla first announced its investment in Bitcoin.

Tesla investment loses amid cryptocurrency plunge

Many criticized the company for not thinking about it in the first place. But Tesla suspended the use of Bitcoin after Elon Musk raised concerns about its carbon footprint.

The company indicated at the time that it would not sell its stake in bitcoin and that it plans to resume receiving bitcoin payments once the network shows a higher mix of renewables.

On concerns about the needs of the Bitcoin power network, she said: We have suspended the purchase of vehicles using Bitcoin. We are concerned about the rapid increase in the use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.

But Elon Musk said earlier this year that he has not personally sold any of his cryptocurrency investments. After a year of investing, Tesla’s Bitcoin holding increased to $2 billion just a few months ago.

But in the crypto world, a lot can change in just a few months. Several major cryptocurrencies have seen significant drops in value amid the broader market downturn.

Tesla’s investment in Bitcoin is now worth about $ 822 million. But her bitcoin holdings represent 10% of her cash position and 0.1% of her total market capitalization.

A number of companies that have transferred parts of their cash reserves to bitcoin, such as software company Microstrategy, have suffered due to the digital currency’s decline. The cryptocurrency market has lost about $1.3 trillion in value this year.

Musk said Tesla needs to cut about 10% of its wage workforce, as its newly opened factories in Berlin and Texas consume huge amounts of money. The CEO of Tesla expects an imminent recession in the United States.

The company has lost 44% of its value this year amid large-scale selling and has struggled to keep up with demand. This is partly due to the shutdown of Shanghai, which caused the company’s plant there to be out of business for extended periods.

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