Tesla loses more than half a billion dollars because of Bitcoin.. not the biggest loser

With Bitcoin soaring to new heights over the past two years, companies led by digital asset enthusiasts have begun adding the highly volatile cryptocurrency to their balance sheets.

And there was a lot of logic behind companies like MicroStrategy, Tesla and Block investing in Bitcoin, which was to guard against the risk of inflation, with some predicting that trillions of dollars of quantitative easing associated with the Corona pandemic would drive up the prices of just about everything.

Although these companies have internalized the impact of quantitative easing and injecting trillions of dollars into major economies and even emerging markets, on inflation, they mistakenly believe that Bitcoin will serve as a powerful hedge.

The cryptocurrency is down nearly 70% from its all-time high amid rising inflation, which confirms that these companies’ theory was wrong.

Bitcoin extended its losses to around $18,000 as of Sunday morning, before bouncing back around the $19,000 level, as concerns about growth space persisted after withdrawals from Celsius network were frozen.

These companies still hold bitcoin on their balance sheet, and unrealized losses are starting to accumulate to more than $1 billion combined.

Losses reveal a big drawback to adding highly volatile assets to a corporate balance sheet, which is usually dedicated to more stable assets such as the US dollar, stocks and assets.

Below is an estimate of Tesla, MicroStrategy, and Block’s unrealized losses from Bitcoin’s declines.

1. Block

Bitcoin ownership: 8,027 units
Average cost: $27407
Estimated unrealized losses: $67.5 million

2. Tesla

Portfolio Size: 42,000 Bitcoin
Average cost: $31,620
Estimated unrealized losses: $529.2 million

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3. Micro Strategy

Her wallet size: 129,219 Bitcoin
Average cost: $30,700
Estimated unrealized losses: $1.51 billion