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Bitcoin - Potential Q2 2021 Impact
- Thread starter The Accountant
- Start date
Some Additional Bitcoin Impairment Insights:
I have been unable to reconstruct the Q2 impairment charge of $23m using quoted "daily low prices" from various exchanges.
My current conclusion is that Tesla does not automatically take the low price of the quarter for a write down.
Let's take a look at their accounting policy as provided in the 10Q. I highlight key terms/phrases:
With a book value of $1.31B at June 30, here are some possibilities:
We know that Bitcoin dropped to about $29,200 in Q2, yet Tesla's investment is valued above $31,000.
In looking at Q2 hourly prices, it appears that Bitcoin only dropped below $31,000 for about 3 hours in the entire quarter (and on one day).
It appears that Tesla does not automatically take the lowest price in the quarter and takes into consideration other factors when determining the impairment charge (if any).
I will not project an impairment for Q3, since Tesla's exact methodology requires some judgment on their part for which I cannot forecast.
I have been unable to reconstruct the Q2 impairment charge of $23m using quoted "daily low prices" from various exchanges.
My current conclusion is that Tesla does not automatically take the low price of the quarter for a write down.
Let's take a look at their accounting policy as provided in the 10Q. I highlight key terms/phrases:
- an analysis each quarter - Tesla performs an impairment review once in the quarter, likely during the quarter end accounting close.
- principally - the use of the word principally is important as it indicates that a decrease in quoted prices is the main factor in determining if an impairment has occurred but it is not the sole indicator.
- that it is more likely than not - another important term. Just a mere decrease in quoted prices does not automatically indicate an impairment. It must be more likely than not that an impairment has occurred.
- we consider - Tesla "considers" the lowest market price. By considering the lowest price, it means that Tesla does not automatically use the lowest price for impairment; they take it into consideration.
With a book value of $1.31B at June 30, here are some possibilities:
We know that Bitcoin dropped to about $29,200 in Q2, yet Tesla's investment is valued above $31,000.
In looking at Q2 hourly prices, it appears that Bitcoin only dropped below $31,000 for about 3 hours in the entire quarter (and on one day).
It appears that Tesla does not automatically take the lowest price in the quarter and takes into consideration other factors when determining the impairment charge (if any).
I will not project an impairment for Q3, since Tesla's exact methodology requires some judgment on their part for which I cannot forecast.
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It depends on the source. I am not sure what would be considered the official price.
NASDAQ has
Q2 low of 31,216 (June 21)
Q3 low of 29,519 (July 20)
CoinDesk has
Q2 low of 29,031 (June 22)
Q3 low of 29,307 (July 20)
Using NASDAQ we have an impairment. Using CoinDesk we don't.
Bitcoin historical prices are a disaster.
Dave Lee had a totally different pricing than NASDAQ and CoinBase and computes a 58m loss:
What is this "closed" that Dave refers to? Bitcoin trading doesn't ever close. Is he talking about at 23:59:59 for the day?
I use CoinMarketCap.com and look for the lowest price, regardless of when it is during the day. (Which is how I come up with the $28.8k for 6/22.)
Dave also has too many BTCs, as Elon said that they don't even have 42,069. (But I think he said it was close.)
I use CoinMarketCap.com and look for the lowest price, regardless of when it is during the day. (Which is how I come up with the $28.8k for 6/22.)
Dave also has too many BTCs, as Elon said that they don't even have 42,069. (But I think he said it was close.)
Since you got it right for Q2, I tend to believe you're working with the right source (CoinMarketCap.com).
It would be great if there was no impairment for Q3.
I'm bookmarking CoinMarketCap for future reference.
Thanks
CoinMarketCap is my go to source for all crypto pricing as well. Based on their historical prices I don’t think there is a Q3 impairment, but only three more sleeps until we all find out!
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