- Elon Musk’s Tesla Sells 75% of its Bitcoin holdings valued at US$936M
- Elon still remains bullish on crypto bringing value to a promising future
- BTC and ETH holding their ground, up 0.54% and 1.13% respectively on the 1-hour chart
Elon Musk is an icon within the crypto space largely due to the fact of his association with the dogecoin meme, but it is also because Tesla is one of the prominent institutional investors of Bitcoin.
In the latest earnings report, Tesla revealed that it has sold the majority of its Bitcoin holdings: “We have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet.”
“It should be mentioned that the reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the Covid lockdowns in China would alleviate. So it was important for us to maximize our cash position, given the uncertainty of the Covid lockdowns in China,” elaborated by Elon Musk.
In fact, the news of Tesla’s US$1.5B purchase of bitcoin caused US20K bitcoin in 2020 to explode to US$60K in March 2021. At one point, Tesla’s reserve of bitcoin hit a hit of US$2B in value. It is also noted that Tesla originally bought bitcoin to “provide us with more flexibility to further diversify and maximize returns on our cash,” the company said in its 2021 SEC filing.
Crypto prices have since fallen from their 2021 highs. Bitcoin is down 48% since the year began, while ether, the second biggest crypto, has fallen 57% since Jan. 1. The news did not falter the crypto market as badly as people would think. BTC, which made its move above US$24K dropped slightly to US$23.3K while Ether showed similar sentiment of its slight drop after the recent “relief rally”.
There is also debate over whether Tesla’s bitcoin sale was done out of necessity to maintain cash flow, or if it reflects faltering confidence in bitcoin and crypto in general.
According to Wednesday’s earnings release, Tesla has $621 million in cash, so without the $936 million bitcoin transaction, it would have had negative cash flow.
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” tweeted Elon himself. After announcing Tesla would accept payment in their electric vehicles through bitcoin, he retracted to say he would be pausing out payments due to environmental concerns due to the amount of fossil fuel energy its production requires.
Elon Musk has yet to sell any of his Dogecoins.
[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]
Featured Image Credit: ChainDebrief