Just a year after calling Bitcoin (BTC) a digital asset with a “long-term potential”, Elon Musk’s Tesla dumped 75% of its holdings in 2022. The electric vehicle maker had invested $1.5 billion in BTC early last year. By now it has already converted 75% of its Bitcoins into fiat currency, collecting $936 million from the sale.
Tesla’s second-quarter earnings statement released on Wednesday said, “As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet.”
The second quarter of 2022 has been one of the worst quarters for cryptocurrency markets. Bitcoin price plunged from around $46,000 at the start of the quarter to below $19,000 during the period, which has also been dubbed a “crypto winter”.
Elon Musk was one of the biggest crypto influencers in last year’s massive rally that saw BTC rising to near $69,000 and many so-called experts predicting the oldest cryptocurrency may soon cross the $100,000 mark. However, all predictions have fallen flat this year as crypto markets have lost around $2 trillion in market cap and several crypto companies are eyeing bankruptcy.
The sale of Bitcoins by Tesla is a rapid retreat for Musk. Though in the earning call, he asserted that the sale should not be seen as any verdict on Bitcoin. He said Tesla sold Bitcoins to maximise the cash position in view of the uncertainness due to Covid lockdowns in China.
“It was important for us to maximize our cash position…We are certainly open to increasing our bitcoin holdings in future, so this should not be taken as some verdict on bitcoin. It’s just that we were concerned about overall liquidity for the company,” Musk was quoted as saying by news agency Reuters.
Tesla has not revealed the price at which it sold its BTC holdings. However, Musk said Tesla would be open to increasing its crypto holdings in the future.
Following Tesla’s earnings announcement, Bitcoin has plunged below the $23,000 mark again, after registering gains for three consecutive days. At the time of writing, it was trading at $22,895.
(Cryptos, including Bitcoin and other virtual digital assets like NFTs, are unregulated in India. They are considered extremely risky for investment. Please consult your financial advisor before making any investment decision)