SpaceX Bitcoin write-down sparks crypto market turmoil

Credits: CryptoAvanza

Bitcoin experienced an abrupt and significant drop to around $25.3k, catching traders off guard and leading to substantial liquidations. This market downturn occurred in the wake of Evergrande’s bankruptcy, yet it’s the SpaceX situation that has become the primary focus of attention.

Recently surfaced reports have offered a rare glimpse into the financial situation of Elon Musk’s SpaceX. These reports indicate that the aerospace company devalued its Bitcoin holdings by a combined total of $373 million over the course of 2021 and 2022.

These revelations were made public by The Wall Street Journal in a publication on Thursday, and they are widely believed to be the catalyst behind the sudden selling spree in the cryptocurrency market. This abrupt market movement followed an extended period of remarkably low volatility.

SpaceX’s Bitcoin Devaluation Impact

The SpaceX predicament, which contributed to the downward spiral of Bitcoin, revolves around information reportedly accessed by WSJ regarding the financial details of SpaceX. These documents revealed that the company’s expenditures for 2022 amounted to around $5.2 billion.

Moreover, the same documents highlighted expenditures of $5.4 billion in both 2021 and 2022. These expenses were linked to various factors, including the acquisition of assets, the procurement of equipment, and costs related to research and development activities.

According to the report, “SpaceX wrote down the value of bitcoin it owns by a total of $373 million last year and in 2021 and has sold the cryptocurrency.”

Read More: SEC delays decision on Bitcoin ETF approvals until 2024

The assertion that SpaceX has liquidated its Bitcoin holdings lacks definitive substantiation due to the company’s private nature. While Elon Musk previously acknowledged the presence of Bitcoin in SpaceX’s portfolio in 2021, detailed information on this matter remains undisclosed.

A “write-down” signifies the adjustment of an asset’s book value when its fair market value (FMV) falls below its recorded carrying value. This term gains relevance in the context of the recent SpaceX situation.

Silence from SpaceX and Musk

As of the present moment, neither SpaceX nor Elon Musk has commented on the report in question. Additionally, the report from The Wall Street Journal (WSJ) doesn’t offer explicit clarity on the specific timing of the supposed Bitcoin sale by SpaceX.

Tesla’s Prior Bitcoin Actions

In contrast, Tesla’s actions provide a point of reference. During Q2 2022, Tesla sold over 30,000 BTC, yielding $936 million. This transaction amounted to approximately 75% of the initial Bitcoin holdings valued at $1.5 billion.

As per the Q2 2023 earnings report, Tesla had divested itself of all Bitcoin holdings, retaining only those valued at around $184 million. This shift in Tesla’s stance contrasts with the uncertainty surrounding SpaceX’s reported Bitcoin activities.