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GLOSSARY/IMPAIRMENT

Impairment

COMPANIES
DEFINITION
An accounting write-down recognizing that an asset on the balance sheet is worth less than its recorded value. For companies holding bitcoin, price declines flow through reported earnings as impairment losses — even when no coins are sold.
The key distinction is paper versus realized. An impairment doesn't mean the company sold anything, lost custody of anything, or changed strategy — it means the accountants compared the asset's market value to what's on the books and booked the difference as a loss. Tesla's $112 million Q2 charge on 11,509 unmoved BTC is the textbook case: same coins, smaller income statement.
The rules have evolved. Under the old US GAAP treatment, bitcoin was an "indefinite-lived intangible": companies had to write it down whenever price dipped but could never write it back up until they sold — a one-way ratchet that made corporate earnings look worse than the position. Fair-value accounting fixed the asymmetry: holdings are now marked to market each quarter, so down quarters produce losses and up quarters produce gains. That symmetry is exactly what makes every bitcoin treasury company's quarterly report a bitcoin price report in disguise.
IN A SENTENCE
“Tesla booked a $112 million impairment on its bitcoin — a loss on coins it never sold.”

Key facts

What it isA write-down on the income statement
What it isn'tA sale, a hack, or a strategy change
Cash impactNone — non-cash accounting charge

Common questions

Does an impairment mean the company lost money?

On paper, yes; in cash, no. The loss is only realized if the coins are sold at the lower price. If bitcoin recovers, fair-value rules let the same holding produce a reported gain next quarter.

Why do headlines make impairments sound like sales?

Because "Tesla loses $112M on bitcoin" travels better than "non-cash quarterly mark-to-market adjustment." Check the holdings count: if the BTC number didn't change, nothing was sold.
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