Tesla and bitcoin on the balance sheet

Not many large firms hold bitcoin as an asset, but Tesla is one of them. A recent article in the Wall Street Journal highlights how bitcoin is accounted for by Tesla.

According to the article, Tesla holds about $1.5 billion in bitcoin. This, like any currency holdings, is an asset on the company balance sheet. If you have read any media reports of late you may know that bitcoin hit some historic highs recently, but it’s value is volatile. From a balance sheet perspective, as an asset it must be tested for impairment at least annually and any gains or losses are reported immediately against earnings/profit. The WSJ article suggests some positive results reported by Tesla in recent times are a result of selling some bitcoin holdings – alongside sales of some other credits it holds.

As most companies do not yet sell products for bitcoin or other crypto currency, we do not get to see how volatility effects balance sheets. I am not sure it would be a good thing to have balance sheets subjected to such fluctuations, as is the case in some hyperinflationary economies with devaluing currency.