WSJWhatsNow: Companies holding bitcoin in their treasuries, like Tesla, face an accounting risk. paulvigna explains.
But companies holding bitcoin in their treasuries face an accounting risk: Because bitcoin and other digital assets are consideredrather than currencies, any decrease in their value below what the company paid for them—even a temporary one—can force a company to write down the value and take an impairment charge.
Bitcoin’s volatility, combined with this accounting treatment, makes it hard for corporate officers to manage crypto holdings as cash, which makes it less useful as a reserve asset, said Jennifer Stevens, an accounting professor at Ohio University.Elon Musk’s comments on assets like bitcoin and dogecoin have helped send prices sky high – and crashing down—over the past year. WSJ explains Mr.
That means Tesla likely held around 37,000 bitcoins after slightly trimming its position in the first quarter. He added that the company was likely buying across January and at least some of those holdings are now being held at a loss. Last week, it said it expects to take a charge of at least $285 million on its bitcoin investment in the current period, which will push it to another quarterly loss.Should more companies hold bitcoin or stay away from the cryptocurrency, and why? Join the conversation below.
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