Tesla’s Q2 2023 earnings report revealed its commitment to Bitcoin as it maintained its current holdings, with no new buying or selling of $BTC during this quarter.
The American multinational automotive company showcased its ability to outperform market expectations despite the bears overpowering the overall scene. The latest report showed its long-term embrace of the top cryptocurrency.
Back in February 2021, the company announced putting $1.5billion worth of Bitcoin on its balance sheet. This ultimately drove the cryptocurrency’s value to new heights as the move was a big step in acceptance of crypto in corporate sector.
Tesla’s CEO, Elon Musk, who is also known to hold some quantity of Bitcoin, soon announced that the company would be accepting $BTC for its e-cars. However, later on it reversed its decision and stopped selling cars for Bitcoin over environmental concerns related to proof-of-work mining. Musk claimed that it would resume accepting $BTC once its mining becomes at least 50% based on green energy technologies.
Last year, the company took another significant turn by selling more than 30,000 Bitcoins in the second quarter. This represented approximately 75% of its holdings.
This year also saw Bitcoin prices rising from around $28,500 at the end of the first quarter to around $30,400 at the end of the second quarter. While this would typically have resulted in a paper gain for Tesla’s digital asset holdings, the current regulatory framework does not allow companies like Tesla to recognise such unrealised gains. A way around this accounting rule is by disposing of the digital assets through a sale.
However, following the conservative way of accounting, companies have to reflect a decrease in the value of their digital assets when prices decline, even if no sale has taken place.
Considering the current market value of the assets, this would provide a more accurate representation of the firm’s financial position. However, it also means that companies may not immediately benefit from the appreciation of the value of their digital assets until they decide to sell them.
On the other hand, Tesla surprised the market by reaching an impressive $24.9bn in the company’s revenue for the quarter. Analysts had only estimated some $24.2bn. According to FactSet, it also reported adjusted earnings per share of $0.91, surpassing the consensus analyst estimate of $0.80.
On the flip side, the price of Tesla’s shares dropped by 3.44% in pre-market overnight. At the time of press, it is trading at $281.97. But over the year, the company’s stock has thus far risen by over 136%, which has been regarded as an impressive feat by the industry.
Crypto Regulation, Cryptocurrency