Tesla bet fails massively, company loses $141m on Bitcoin

A risky investment didn’t pay off for the tech company — and they had to own up to the mistake very publicly.

Electric vehicle giant Tesla has lost US$101 million (A$141 million) after a risky gamble failed to pay off.

The tech company revealed in its annual report to the US Securities and Exchange Commission, released last Friday, that it had taken a hit to its finances because of its decision to invest in Bitcoin.

In January last year, the company spent US$1.5 billion (A$2.11 billion) on Bitcoin.

Tesla, founded by billionaire engineer Elon Musk, also briefly accepted Bitcoin as payment for its electric cars but quickly backflipped over concerns of the environmental impact of cryptocurrency mining.

“In the year ended December 31, 2021, we recorded approximately $101 million of impairment losses resulting from changes to the carrying value of our bitcoin,” Tesla’s statement reads.

It comes after a horror end to the year and a horror start to 2022 for Bitcoin holders.

Elon Musk’s company lost $141 million from a risky investment. Picture: Brendan Smialowski / AFP

Bitcoin hit an all-time high of nearly US$69,000 (A$96,000) but just weeks later it had shed more than half that value to sit on a 2022 low of $33,000 in January.

Since then BTC has rallied a bit, and is now at a price point of US$43,000 (A$60,000).

At the same time as Bitcoin’s all-time high, the combined cryptocurrency market capitalisation peaked at US$3 trillion. Now, it’s lost one-third of that number, sitting at US$2 trillion just three months later.

Mr Musk is a strong believer in cryptocurrency, and has been hailed as the “crypto king” and “doge father” in the past after throwing his weight behind certain blockchains.

Tesla & Bitcoin pic.twitter.com/YSswJmVZhP

— Elon Musk (@elonmusk) May 12, 2021

Despite the financial loss, Mr Musk still believes in the benefits of investing in Bitcoin, the report revealed.

“We believe in the long-term potential of digital assets both as an investment and also as a liquid alternative to cash”.

And Tesla still managed to make some profit from its Bitcoin risk.

They sold Bitcoin in March 2021, before the cryptocurrency crash, with a gain of US$128 million.

Bitcoin’s fluctuating price — mostly in the red zone — over the last month.

This is a small blip for Tesla, which posted record gains for the last year.

The EV company increased its profits six-fold in 2021.

Tesla made a whopping US$5.5 billion in profit in 2021 compared to US$721 million the year before.

Its sales rose by 71 per cent in a year, going from $31.5 billion to $53.8 billion.

The final quarter of last year was particularly strong, with revenue at US$17.72 billion in the last three months of 2021, up considerably from US$10.74 billion during the same period of time in 2020.

This is only the third year in a row that Tesla turned a profit after its creation 19 years ago.

CEO Elon Musk said 2021 had been a “breakthrough year” and that he believed Tesla had finally become a “real company”.