SpaceX, led by Elon Musk, reportedly turned a slight profit in the first quarter of 2023 after writing off losses in 2021 and 2022. Uncertainty has arisen over whether SpaceX has sold all of its Bitcoin, having reduced its value by $373 million. Accounting rules dictate that once written, the value of Bitcoin cannot be adjusted upward, even if the price goes up.
SpaceX reportedly reduced the value of its Bitcoin by a total of $373 million and potentially liquidated all of its holdings. The Elon Musk-led firm rebounds from year-on-year losses for 2021 and 2022 and reportedly posts a slight profit in the first quarter of 2023.
In mid-2021, Elon Musk, the CEO of SpaceX and Tesla, announced for the first time that his aerospace company owned some Bitcoin (BTC). The billionaire did not specify the amount, but assured that just as his electric car company kept bitcoins on its balance sheet, SpaceX did too.
On Thursday, a Wall Street Journal report revealed that that investment was valued at $373 million for last year and into 2021. However, SpaceX no longer owns the same portion as the company reduced its stake in the cryptocurrency, according to indicates the report without providing details about the amount of the sale or the date of the transaction.
In the past two years, Tesla has sold $936 million worth of bitcoin, bringing its BTC balance to an estimated $184 million, according to the latest quarterly earnings report published in July 2023.
SpaceX Financial Statements Cast Questions About Its Bitcoin Holdings
The Wall Street Journal report on August 17, which analyzed the company’s financial statements, leaves uncertainty as to whether SpaceX actually sold all of its Bitcoin: “SpaceX wrote down the value of bitcoin it owns to a total of $373 million last year and in 2021 and sold the cryptocurrency.”
The Wall Street Journal report on Bitcoin sales by SpaceX coincided with a notable price crash in the cryptocurrency market. Bitcoin, the largest by market capitalization, plunged more than 10% on Thursday below the $26,000 mark, its worst price in more than 60 days. Other major digital currencies replicated the decline, including Ethereum (ETH), XRP, and Dogecoin (DOGE), which posted losses of up to two figures of a percentage.
However, the Big Four accounting firm Deloitte states that the accounting treatment of Bitcoin generally involves considering it as an “indefinite-lived intangible asset.” It states to book Bitcoin at cost and then make adjustments if the price declines.
Should the value of Bitcoin decline, the company must report a reduction on its books, known as impairment charges. After recording a decrease, the value of the asset on the balance sheet cannot be “written”. This rule applies to any subsequent rise or bounce in the price of Bitcoin.
In Q4 2022, Tesla, led by Musk, revised the value of its Bitcoin holdings down due to a decline from purchase. The company reported $34 million in impairment charges, while its total holdings were assessed at $184 million. Since June 2021, Tesla has consistently reported impairment losses in consecutive quarters.
Bitcoin Is Not Musk’s Favorite Cryptocurrency
While Musk’s company might own substantial stakes in Bitcoin, he often alludes to Dogecoin as his favorite crypto, simply because “he has the best humor and he has dogs.”
Musk made it clear that he did not intend to provide any financial advice: “I am not advising anyone to buy cryptocurrency or bet the farm on Dogecoin or anything like that,” he says.
By Audy Castaneda
