Electric carmaker Tesla is facing a $ 440 million (RM1.9 billion) loss on Bitcoin (BTC) holdings following a sharp fall in the crypto market.
Early last year, Tesla had bought a large amount of Bitcoin worth $ 1.5 billion.
However, the fall in the BTC price to below $ 20,000 this year has brought huge losses for the company.
Last Thursday (the last day of Tesla’s second financial quarter), Bitcoin traded at around $ 19,000 making the company’s investment an estimated $ 820.8 million.
Three months ago, the company recorded its Bitcoin value at $ 1.26 billion. Although the market value of the holdings is close to $ 2 billion, accounting practices mean the company does not record a profit on its investment until it is sold.
This means Tesla is likely to post a decline on its Bitcoin holdings of around $ 440 million or 9% of its annual profit in 2021.
Aside from its investments, the Elon Musk -owned company has also begun accepting Bitcoin as a payment method but suspended its use due to environmental concerns from Bitcoin mining.
Other companies that also convert part of their cash reserves into Bitcoin such as MicroStrategy, Coinbase and Block Inc. also experienced a decline in the value of holdings as a result of these uncertainties.
In total, about $ 1.3 trillion has been wiped out of the cryptocurrency market this year.
