Tesla Records $170 Million Impairment Charge on Bitcoin

Because accounting rules define digital assets as indefinite-lived intangible assets, Tesla said it must recognize impairment charges to reflect any decrease in the fair value of cryptocurrencies held by the company below their carrying values.

“We may make no upward revisions for any market price increases until a sale,” the company said. “These charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase.”

Last week, Tesla Chief Executive

Elon Musk

said the company sold $936 million worth of bitcoin in the second quarter to maximize its cash position as it dealt with the closure of its Shanghai factory due to local Covid-19 lockdowns. The company has unloaded around 75% of its $1.5 billion initial position in the cryptocurrency, leaving it with about $218 million worth of digital assets as of the end of June. The company made its bitcoin purchase in the first quarter of 2021.

“We are certainly open to increasing our bitcoin holdings in future, so this should not be taken as some verdict on bitcoin,” Mr. Musk said on Tesla’s quarterly earnings call. “It’s just that we were concerned about overall liquidity of the company given shutdowns in China, and we have not sold any of our dogecoin.”

Mr. Musk has been a vocal commentator on digital currencies. Tesla briefly accepted bitcoin as payment for its vehicles but suspended that policy in May 2021, citing concerns about the use of fossil fuels to mine bitcoin. Mr. Musk said at the time that Tesla wouldn’t sell any bitcoin.

Tesla’s filing didn’t specify exactly when the company sold or began to sell its bitcoin holdings. In March, Mr. Musk tweeted that he wouldn’t sell his personal holdings in bitcoin, ether or dogecoin.

The car maker, in the regulatory filing, also lifted its plans for spending on capital projects by about $1 billion for this year and the next two. Tesla said its capital expenditure now is expected to be between $6 billion and $8 billion in each of those years. The company is rapidly expanding to keep up with strong demand and this year added two new car plants—near Austin, Texas, and Berlin. Mr. Musk has called the two plants “gigantic money furnaces,” while adding the company would resolve ramp-up challenges there.

Tesla also disclosed it had received a new request for information from the SEC in June related to the company’s compliance with a court-ordered settlement requiring certain of Mr. Musk’s tweets be preapproved. The SEC sent Tesla a similar information request in November.

In a different matter, Tesla said the U.S. Equal Employment Opportunity Commission in June came to similar conclusions as a California agency that sued the company in February, saying the company had turned a blind eye to years of complaints from Black factory workers. Tesla plans to begin settlement talks with the EEOC, the company said.

A spokesman for the federal agency, which is responsible for enforcing antidiscrimination laws, declined to comment on the agency’s findings.

—Rebecca Elliott contributed to this article.

Write to Will Feuer at [email protected]