Reports indicate that SpaceX, the technology company led by Elon Musk, has notably reduced the value of its Bitcoin holdings by a staggering $373 million. This move has sparked speculation that the firm might have liquidated its entire Bitcoin stash.
SpaceX initially disclosed its Bitcoin holdings in 2021, but accounting regulations stipulate that once an asset’s value has been written down, it cannot be adjusted upwards again.
The Wall Street Journal’s report on August 17 revealed that SpaceX had marked down its Bitcoin value by $373 million over the past two years and has apparently sold the cryptocurrency. While it’s not definitively confirmed if the company has liquidated its entire $373 million Bitcoin holding, financial documents viewed by the outlet showed significant expenses in the range of $5.2 billion for property and equipment acquisition, research, and developmental costs in 2022.
Accounting firm Deloitte categorizes Bitcoin as an “indefinite-lived intangible asset.” Under its guidelines, companies must record Bitcoin at cost and make adjustments if its value experiences a substantial decline, which is known as a write-down or impairment charge. Importantly, if the value of Bitcoin drops, it cannot be revalued upwards in response to future price increases.
Elon Musk, who leads SpaceX, publicly revealed the company’s Bitcoin acquisition in 2021. Tesla, another company associated with Musk, had also made headlines with its $1.5 billion Bitcoin purchase. However, Tesla’s subsequent reports indicated that it had sold a significant portion of its Bitcoin holdings in 2022.
In the second quarter of 2022, Tesla liquidated over 30,000 BTC, netting around $936 million. This equated to approximately 75% of its original Bitcoin holdings. Since then, Tesla has retained its remaining Bitcoin reserves, maintaining their value at around $185 million through the second quarter of 2023.
Elon Musk has a history of engaging with the cryptocurrency space, particularly expressing enthusiasm for Dogecoin. While his companies have held significant Bitcoin amounts, Musk has stated his affinity for Dogecoin’s humor and dogs without providing explicit reasons for his preference. Despite his involvement, Musk has also advised caution and refrained from recommending excessive investment in cryptocurrencies.