Tesla CEO Elon Musk has sold 75% of his Bitcoin holdings in the company’s name. Musk had previously said he would not sell the bitcoins held by Tesla, but he sold them in the process of a recent plunge in value due to concerns about a recession.
Tesla released its earnings report on the 20th (local time) and added $936 million in cash to the company’s balance sheet, saying, “In the second quarter, it converted 75% of its bitcoin holdings into fiat currency.” revealed the facts.
Tesla explained that digital assets, including cryptocurrencies, fell to $218 million, and the decline in bitcoin prices took a toll on profitability in the second quarter.
Tesla invested $1.5 billion in Bitcoin in February 2021 and sold a 10% stake in April of that year. At the time of purchase, the price of Bitcoin was between $32,000 and $33,000, and in June it fell to $18,731. Barclays analyst Brian Johnson recently analyzed that Tesla could have lost a valuation of $460 million in the second quarter if it had not sold bitcoin.
In a conference call, Musk said, “It is uncertain when China’s COVID-19 lockdown will be eased, so we sold Bitcoin to maximize our cash reserves. not,” he explained. It means that they sold bitcoin to respond to the liquidity crisis, and did not give up their intention to invest in cryptocurrencies. “Dogecoin was not sold,” Musk said.
When Dogecoin launched Dogecoin in May of last year and there were speculations that he would stop investing in bitcoin, Musk said, “I will not sell the bitcoin owned by the company.”
The Washington Post (WP) explained that “Tesla’s Bitcoin sale represents a dismal milestone for cryptocurrencies. As news of Musk’s sale was announced on the same day, the bitcoin price fell to $23,000 and then rebounded slightly.
Meanwhile, Tesla’s net profit in the second quarter was $2.26 billion, nearly doubling from $1.14 billion in the same period last year. Adjusted earnings-per-share came in at $2.27, better than Wall Street’s estimate of $1.81.
Revenue was $16.93 billion, down 9.8% from $18.76 billion in the first quarter. This is because production was disrupted as the Shanghai plant was shut down in the aftermath of China’s COVID-19 lockdown. According to Reuters, Tesla made its profits by raising the price of electric vehicles.
“We raised the price quite a bit,” Musk said. “It’s a shame, frankly,” he said. “I’m not making any promises, but I hope one day we can lower the price,” he said.