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Wednesday, February 8, 2023

Tesla, MicroStrategy, Block Have Lost Combined $1 Billion on Bitcoin

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  • Amid bitcoin’s rise over the past two years, a number of companies added the crypto to their balance sheets.
  • But Bitcoin’s 68% decline from its record high has created significant unrealized losses for those firms.
  • Here’s how much unrealized losses Tesla, MicroStrategy, and Block have in their bitcoin position.

As bitcoin surged to new heights over the past two years, companies led by digital asset enthusiasts began to add the highly volatile cryptocurrency to their balance sheets.

Much of the rationale behind companies like MicroStrategy, Tesla, and Block investing in bitcoin was to protect against the threat of inflation, as some rightly expected that trillions of dollars of COVID-19 related stimulus would lead to higher prices for nearly everything.

But while they got that part right, what they seemed to have gotten wrong is whether bitcoin would act as a solid hedge against inflation. Having fallen nearly 70% from its record high amid soaring inflation, it’s safe to say that theory has been wrong.

Bitcoin extended its losses to about $22,000 on Tuesday, as concerns towards the crypto space continue to grow following the freeze of withdrawals from the Celsius Network.

These companies still hold bitcoin on their balance sheet, and unrealized losses are beginning to pile up to more than $1 billion combined. The losses expose one of the big drawbacks of adding a highly volatile asset to a company’s balance sheet, which is typically reserved for more stable assets like US dollars, property, and inventory, among other items.

Here’s an estimate of unrealized losses Tesla, MicroStrategy, and Block have in their bitcoin balance sheet position.

1. Block

Jack Dorsey, CEO of Twitter and co-founder & CEO of Square, attends the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021.

Jack Dorsey, CEO of Twitter and co-founder & CEO of Square, attends the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021.

Marco Bello/Getty Images


Bitcoin Owned: 8,027 
Average Cost: $27,407
Estimated Unrealized Losses: $42.6 million

2. Tesla

Elon Musk Axel Springer Awards

Elon Musk

HANNIBAL HANSCHKE /Getty Images


Estimated Bitcoin Owned: 42,000   
Average Cost: $31,620
Estimated Unrealized Losses: $399.8 million

3. MicroStrategy

Michael Saylor, CEO of MicroStrategy

Michael Saylor, CEO of MicroStrategy


Joe Raedle/Getty Images



Bitcoin Owned: 129,219  
Average Cost: $30,700
Estimated Unrealized Losses: $1.1 billion

Source

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