SpaceX Reduces Value of Bitcoin Holdings by $373 Million
SpaceX, led by Elon Musk, has reportedly decreased the value of its Bitcoin holdings by $373 million and may have sold all of its cryptocurrency. In 2021, the company had announced its ownership of Bitcoin, but accounting rules prevent the value from being adjusted upwards once it is written down.
Uncertainty Surrounding Bitcoin Holdings
- Wall Street Journal reports that SpaceX had $373 million worth of Bitcoin on its balance sheet in 2021 and 2022.
- It is unclear if the company has sold its entire Bitcoin stash.
- Financial documents reveal expenses of $5.2 billion for 2022, including property and equipment acquisition and research costs.
Bitcoin Accounting and Impairment Charges
- Deloitte suggests that Bitcoin is an “indefinite-lived intangible asset” and should be accounted for at cost.
- If the value of Bitcoin decreases significantly, companies must declare a write-down, but cannot write up the value after a decrease.
Tesla’s Revision of Bitcoin Holdings
- Tesla, another company led by Elon Musk, had purchased $1.5 billion worth of Bitcoin in 2021.
- In the second quarter of 2022, Tesla sold most of its holdings, netting around $936 million.
- Currently, Tesla holds about $184 million worth of Bitcoin.
Musk’s Affinity for Crypto
Elon Musk has shown interest in cryptocurrencies, particularly Dogecoin. He has not given a specific reason for his admiration for Dogecoin but has mentioned its humor and association with dogs. However, he advises against investing heavily in crypto.
Hot Take
SpaceX’s reduction in Bitcoin value and Tesla’s revised holdings indicate the volatility and unpredictable nature of the cryptocurrency market. Despite Musk’s involvement, it remains uncertain how these companies will navigate their crypto investments in the future.
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