Elon Musk’s Tesla, famous for its reckless cryptocurrency gambles, has moved about $765 million worth of Bitcoin to at least 12 unidentified wallets, according to Arkham Intelligence, a blockchain-based investigation firm. What it means is anybody’s guess. Does Tesla plan to dump the transferred Bitcoin? The amount is massive, yet it still represents about 0.85 per cent of Tesla’s nearly $700 billion market capital at the time of writing. In early 2021, Tesla announced it had invested $1.5 billion in Bitcoin, and the price surged on the news. Later that year, it suspended Bitcoin payments over environmental concerns, but vowed not to sell its holdings.
In 2022, Tesla revamped its policy by selling much of its Bitcoin in a price swoon, realising a loss versus the price it originally paid. While the company sold off most of its Bitcoin, its remaining stash has continued to appreciate and, once the Financial Standards Accounting Board adopts new accounting rules that will likely require crypto to be carried at fair value (rather than the prior accounting method that allowed write-downs of cost basis only if assets were sold), Tesla’s Bitcoin financial reporting will likely further amplify the volatility of the company’s observed market value.
Today, Tesla owns fewer than 10,000 BTC, which have appreciated in value enormously. The new accounting standards that take effect from 15 December enable Tesla to reflect that appreciation in its financial statements, with amendments that would make Tesla’s financial statements more transparent about the true value of its crypto assets. Those prospects could very well lead to higher reported net income for Tesla, depending on the implication of those market conditions and asset management strategies moving forward.
Source: Yahoo! Finance
