Tesla and MicroStrategy Release Q3 Earnings — Did They Lose Money on Bitcoin Investment?
Recently, there has been no shortage of news surrounding Tesla and its CEO Elon Musk — not only has Tesla's surging stock price pushed its market cap into the trillion-dollar club, but also the long-awaited news about digital asset investment has resurfaced in Tesla and Musk's activities. Just four days before Tesla's market cap broke through the trillion-dollar mark, on October 21st, Tesla released its third-quarter earnings report. According to the report, Tesla's Q3 revenue reached $13.76 billion. For crypto investors closely following its Bitcoin holdings, Tesla disclosed that the company had no new digital asset sales or purchases during Q3, with its digital asset holdings (primarily Bitcoin) valued at $1.26 billion, recording an impairment charge of $51 million.
Does "Impairment" in Tesla's Earnings Report Mean a Loss?
For non-professionals, seeing the description "an impairment charge of $51 million" for digital asset investments in Tesla's Q3 earnings report may lead to an association with "losses." But is that actually the case? Clearly not. Whether viewed from the Bitcoin price trend in the Q3 crypto market or from professional accounting standards, this is a misunderstanding.
When we tracked Tesla's Q2 earnings report, we previously noted that according to Fortune, the Financial Accounting Standards Board (FASB) classifies Bitcoin and similar digital assets as "indefinite-lived intangible assets," which gives companies considerable flexibility in how they handle crypto assets on their balance sheets. Under current rules, there are primarily two methods. The first compares the Bitcoin purchase price to the fair market value at quarter-end. For example, if the Bitcoin price on September 30th is lower than Tesla's average purchase price, an impairment must be recorded, with the impairment amount equal to the "purchase price" minus the "quarter-end market price." If there are gains, they are calculated at the acquisition cost. The second method is the continuous impairment approach, which requires recognizing impairment whenever the Bitcoin market price falls below the purchase price of any portion of coins held. For example, if Tesla purchased some Bitcoin at $35,000 in early February, and on May 19th, Bitcoin plummeted to below $30,000, that portion of Bitcoin would require a $5,000 impairment charge. Even if Bitcoin later rebounds above $30,000, Tesla cannot re-enter the coin price to reverse the impairment — the impairment persists indefinitely.
Looking at Tesla's Q1 earnings report, Tesla sold 10% of its holdings, generating $272 million in revenue and a net profit of $101 million. Despite Bitcoin surging throughout Q1 and closing at $59,286.3 on March 31st, Tesla still recorded a $27 million impairment charge, indicating that a small portion of Tesla's Bitcoin holdings fell below the original cost, triggering this impairment. Therefore, we can infer that Tesla uses the second method — the continuous impairment approach.
Now that the method Tesla uses has been clarified, calculating its actual profit and loss is straightforward. According to OKLink ChainStats, globally, there are currently 43 companies with publicly verifiable Bitcoin holdings as a store of value, collectively holding 558,600 Bitcoin, with a current total holding value of $34.144 billion, representing 2.93% of Bitcoin's total market cap.
Overview of Bitcoin holdings by select public and private companies. Source: OKLink ChainStats
Tesla holds 40,900 Bitcoin, ranking fourth among all companies holding Bitcoin and representing 0.22% of Bitcoin's current circulating supply. Based on the latest Bitcoin price on OKX (approximately $61,600 per BTC), the current total value of its holdings is approximately $2.498 billion. Meanwhile, as shown in OKLink ChainStats' statistical data, its total cost was approximately $1.3 billion. A rough calculation shows that during the reporting period of Tesla's Q3 earnings, Tesla earned a profit of at least $1 billion.
What Does MicroStrategy's Q3 Earnings Report Say?
Following Tesla, on October 28th, 2021, another publicly listed company holding a substantial amount of Bitcoin — MicroStrategy — also released its third-quarter financial results. The company stated that after successfully raising funds through market stock issuances (for details on this, please refer to the article published earlier by OKX Academy: "MicroStrategy Plans to Issue More Debt to Add to Bitcoin Holdings — Is Anyone Buying After a $285 Million Impairment?" ), MicroStrategy significantly increased its Bitcoin holdings in Q3, adding nearly 9,000 Bitcoin.
According to the earnings report, as of September 30th, 2021, MicroStrategy held 114,042 Bitcoin with a book value of $2.406 billion and cumulative impairment losses of $754.7 million since acquisition, with an average book value per Bitcoin of approximately $21,095. According to the calculation method for the digital asset portion of US current accounting rules mentioned above, if the asset price falls below the company's purchase price at any time during the quarter, the company must report the impairment to the SEC.
Additionally, in MicroStrategy's latest earnings report, we also found that as of September 30th, 2021, MicroStrategy's Bitcoin original cost and market value were $3.16 billion and $4.965 billion respectively. This data is largely consistent with the information compiled by OKLink as shown in the chart above, indicating that MicroStrategy remains the world's largest publicly listed company holding Bitcoin. The company has also stated that it will continue to evaluate future opportunities and raise additional funds to execute its Bitcoin strategy. Based on the current Bitcoin price on OKX, its Bitcoin holdings are worth nearly $7 billion. In contrast, MicroStrategy's total market cap is approximately $7.4 billion.
In the article "MicroStrategy Plans to Issue More Debt to Add to Bitcoin Holdings — Is Anyone Buying After a $285 Million Impairment?" , we briefly introduced MicroStrategy's aggressive Bitcoin buying spree in the market and the significant influence of its CEO, Michael Saylor, in the crypto world. MicroStrategy's debt issuance to increase Bitcoin holdings occurred in early June of this year. After MicroStrategy reported to the SEC that it expected impairment losses of at least $284.5 million on Bitcoin investments in Q2, it immediately announced the issuance of $400 million (later increased to $500 million) in Senior Secured Notes to purchase Bitcoin, with an annual interest rate of 6.125%, maturing in 2028. Shortly after the debt financing announcement, MicroStrategy received $1.6 billion in orders — four times its initially sought amount. Now, looking back at MicroStrategy's seemingly bold move, we cannot help but acknowledge the accuracy of its judgment on crypto market trends and its long-term vision. After all, at that time, the entire crypto market was shrouded in the gloom of the May 19th extreme downturn, with pessimism spreading widely. MicroStrategy's counter-trend increase in holdings required considerable courage.
Looking at the current situation, with market developments having progressed to where they are now, the crypto market has successfully emerged from the pessimism of Q2. Not only has the total market cap of the crypto market hit a new high in Q3, but Bitcoin prices have also broken the records set in mid-April, briefly approaching $67,000. More recently, Bitcoin has closed above $60,000 for seven consecutive days, giving market investors more confidence.
Bitcoin recent price trend. Source: OKX
Although both examples selected in this article achieved remarkable results in Bitcoin investment, as we have always emphasized, in any investment market, and especially in the high-risk environment of the digital asset market, every investor should always maintain reverence for the market and prioritize risk control in order to achieve better investment results.
Disclaimer
This article may contain product-related content not applicable to your region. This article is intended to provide general information only and makes no responsibility for any factual errors or omissions. This article represents the author's personal views only and does not constitute the views of OKX. This article is not intended to provide any advice, including but not limited to: (i) investment advice or investment recommendations; (ii) offers or solicitations to purchase, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. Holdings of digital assets (including stablecoins) involve high risk and may fluctuate significantly or even become worthless. You should carefully consider whether trading or holding digital assets is appropriate for you based on your financial situation. For questions about your specific circumstances, please consult your legal/tax/investment professional. The information contained in this article (including market data and statistical information, if any) is for general reference only. Although all reasonable precautions have been taken in preparing this data and these charts, we assume no responsibility for any factual errors or omissions expressed herein. © 2025 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less may be used, provided that such use is non-commercial in nature. Any reproduction or distribution of the full article must prominently state: "This article is copyrighted © 2025 OKX, used by permission." Permitted excerpts must cite the article name and include attribution, for example, "Article name, [author name (if applicable)], © 2025 OKX." Some content may have been generated or assisted by artificial intelligence (AI) tools. Derivative works and other uses of this article are not permitted.
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