Tesla's bitcoin holdings could result in $460 million loss

According to UK bank Barclays, the decision to hold bitcoin could hurt Tesla's upcoming second-quarter earnings. According to analyst Brian Johnson, with Bitcoin's drop to $19,000 at the end of the second quarter, Tesla could end up reporting an impairment of roughly $460 million.

"With Bitcoin ending the quarter at ~$19k (well below TSLA's likely purchase price range of ~$32-33k), we expect TSLA to take an impairment charge in the quarter of ~$460mn or ~$0.40 per share," Johnson said in a note.

Tesla is scheduled to report its earnings this Wednesday.At the beginning of 2021, an SEC filing revealed that Tesla bought $1.5 billion in Bitcoin. At the time, Bitcoin was worth around $30,000.Since then, Bitcoin has seen massive ups and downs, rising to its all-time high of $69,000 in November 2021 and ending the second quarter of 2022 near $19,000, which was around 70% off its record highs. Bitcoin was trading at $21,905.For Tesla, this means a loss of about $11,270 per coin, which is around $460 million in total based on the calculation that it purchased 42,000 tokens.Bitcoin was hit this year as as investors exited their risk-on positions, and contagion risks impacted all cryptocurrencies. However, some analysts are getting slightly more optimistic about the future of Bitcoin, as the world's largest cryptocurrency breached $22,000.

The published inflation data is another blow to economic and social well-being, as the Federal Reserve are forced to be more aggressive. However, Bitcoin has risen by over 10% since the news, and Ethereum has climbed by almost 40%.

When the market starts reacting positively to negative news, this is a signal that a local bottom could be in for now, as fear may have caused the news to be priced in.