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21 Jul, 2022 02:42

Tesla dumps bitcoins

Elon Musk’s electric car company has sold off 75% of its Bitcoin holdings
Tesla dumps bitcoins

Tesla has liquidated roughly three-quarters of its bitcoins, adding $936 million in cash to its balance sheet, according to the company’s latest earnings report released on Wednesday.

“As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency,” the company revealed in its financial report.

The sell-off “should not be taken as some verdict on Bitcoin,” CEO Elon Musk said during a call with Tesla investors on Wednesday. He explained that the move was required to maximize the cash position and increase liquidity amid the “uncertainty of the Covid lockdowns in China” at the time.

Tesla invested an aggregate $1.5 billion in Bitcoin in the first quarter of 2021, according to previous filings, becoming the second-biggest holder of cryptocurrency in the corporate world, as per analytics firm CoinGecko. The company even announced that it would be accepting Bitcoin as payment for its cars, but Musk abruptly reversed the decision two months later, citing environmental concerns.

“We have not sold any of our Dogecoin,” Musk reassured investors, adding that despite taking an estimated $106 million hit on the liquidation, Tesla remains open to increasing its cryptocurrency holdings in the future.

Overall, the Austin, Texas company reported a better-than-expected $2.26 billion net profit for the quarter, with its shares rising 1.5% to $753.40 in extended trading Wednesday. 

Bitcoin fell to around $23,000 on the news, but rebounded somewhat after Musk’s explanations. The billionaire’s decisions and statements have influenced the value of Bitcoin, Dogecoin, and other cryptocurrencies on numerous occasions in the past, with some crypto investors accusing him of manipulating the market with his messages on Twitter.