- Tesla dumped 75% of its bitcoin holdings.
- In the second quarter earning statement was told about the conversion of Bitcoin into fiat currency.
- After a bull run last year, the digital gold lost its value by more than half.
- Musk said that Tesla would increase its Crypto holding in the future.
American biggest electric car manufacturing company, Tesla, bought bitcoin worth $1.5 billion, touting its “long-term potential” early last year. But, as per the reports, the company has already sold three-quarters of its holdings.
On Wednesday, during its second-quarter earnings statement, Tesla said,
As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency.
As per the company, those sales added a massive amount of cash to its balance sheet, approx $936 million.
Tesla’s CEO Elon Musk, who used to tweet frequently about the digital currencies during the last year’s bull run of the crypto market, is now making a sudden retreat. During the so-called “crypto winter,” which has lasted the past four months, the price of bitcoin has plunged by 50%.
In the first quarter of 2021, Tesla’s fair market value of its bitcoin investments hit $2.48 billion, and it closed the year at nearly $2 billion. Although the company did not specify the sale price or the amount of the impairment, bitcoin started the second quarter at about $46,000 and ended at less than $19,000.
Earlier this week, Barclays analyst Brian Johnson predicted that given the selloff, Tesla would see a $460 million bitcoin-related impairment.
Answering all the queries during the earnings call on Wednesday, Musk said,
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.
Lately, in this context, Musk said that this verdict is not against Bitcoin and Tesla is open to increasing and accumulating its crypto holdings in the future.