Tesla sells most of its bitcoin holdings

Tesla CEO Elon Musk said the decision to sell off most of the company’s bitcoin holdings was aimed at maximizing the company’s cash position. Photo: Patrick Pleul/Pool via Reuters

You’re here (TSLA) has sold 75% of its bitcoins (USD-BTC) holdings, adding $936m (£783.6m) in cash to its balance sheet and sending the cryptocurrency market rolling back as it tries to escape “crypto winter”.

News of the move hurt bitcoin’s recent breakout and exposed how sensitive the cryptocurrency market is to the actions of the world’s richest person, Tesla CEO Elon Musk.

Bitcoin fell 3.1% in 24 hours to $23,000 and Ethereum (USD-ETH) fell 4.5%, to hover around the $1,500 mark.

The electric car maker’s earnings report, released on Wednesday, revealed that it sold the majority of its bitcoin holdings during the second quarter of 2022.

Tesla’s bitcoin holdings were worth around $2 billion at the end of 2021, but the price of the volatile digital asset has fallen more than 50% this year.

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Tesla CEO Elon Musk said the move was aimed at maximizing the company’s cash flow.

On the earnings call, Musk explained the reason, saying, “We sold off a lot of our bitcoin holdings because we didn’t know when the COVID lockdowns in China were going to ease.

“So it was important for us to maximize our cash position, given the uncertainty of COVID lockdowns in China.”

This referred to recent mass testing and lockdowns implemented in major Chinese cities.

Despite the sale, the Tesla boss confirmed that the electric car maker had not sold any of its dogecoins (DOGE-USD) assets.

Musk also confirmed that Tesla is open to increasing its bitcoin holdings in the future.

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He said, “This shouldn’t be taken as a verdict on bitcoin,” he said, making sure to add that Tesla didn’t sell any of its dogecoin.

Musk then claimed that cryptocurrencies weren’t something the company was primarily interested in.

He pointed out that Tesla’s main goal was “to accelerate the advent of sustainable energy”.

He added, “We are neither here nor there on cryptocurrency.”

In 2021, Tesla invested $1.5 billion in the world’s largest cryptocurrency. This was followed by an announcement that it would accept bitcoin as payment.

The revelation in February 2021 of the electric car maker’s bitcoin holdings caused a surge in demand for the cryptocurrency.

However, in May 2021, the electric car maker abruptly reversed its stance on bitcoin payments, causing the price of bitcoin to plummet.

Musk posted a tweet in mid-May citing the environmental damage caused by bitcoin mining as the reason for the halt in cryptocurrency payments.

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