Elon Musk said his Tesla Inc has told 10 per cent of its Bitcoin holdings to prove the liquidity of the cryptocurrency.
Elon Musk said his Tesla Inc has told 10 per cent of its Bitcoin holdings to prove the liquidity of the cryptocurrency. Elon Musk clarified that he has not sold any of his own bitcoin, retaining his personal investment. Tesla CEO Musk was responding to a tweet from Dave Portnoy, an American internet celebrity blogger, who claimed that Musk bought the Bitcoin, pumped it, and then dumped it to make a fortune. Elon Musk on Twitter said that Tesla sold 10 per cent of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on the balance sheet.
“Am I understanding this correctly? Elon Musk buys bitcoin. Then pumps it. It goes up. Then he dumps it and makes a fortune,” Dave Portnoy said in a tweet. Elon Musk replied to the tweet saying: “No, you do not. I have not sold any of my Bitcoin. Tesla sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet”.
Earlier this week, Tesla in its earnings report said that quarter-end cash and cash equivalents fell to $17.1 billion in the first quarter, driven mainly by a net cash outflow of $1.2 billion in cryptocurrency (Bitcoin) purchases, net debt and finance lease repayments of $1.2 billion, partially offset by the free cash flow of $293 million. During mid-April this year, Bitcoin surged to a record high of $64,870. The world’s largest cryptocurrency was up over 3.8 per cent to $54,583.87, according to the data on CoinDesk. On a year-to-date (YTD) basis, Bitcoin has surged 88.41 per cent. While Tesla Inc’s share price rose 1.21 per cent to close at $738.2, helping the Tech-heavy Nasdaq Composite to close at a record high level in overnight trade.
Zachary Kirkhorn, Chief Financial Officer, Tesla, said that company invested $1.5 billion in bitcoin during the quarter, then trimmed its position by 10%, which contributed to a small gain in its first-quarter financials. During the first quarter of 2021, Tesla reported a net income of $438 million. “In some years we may grow faster, which we expect to be the case in 2021. The rate of growth will depend on our equipment capacity, operational efficiency and capacity and stability of the supply chain,” Tesla said in its earnings report. Tesla reported total revenue growth of 74 per cent on-year in the first quarter of 2021.
In a filing with the US Securities and Exchange Commission in February this year, Tesla said it bought the bitcoin for more flexibility to further diversify and maximize returns on its cash. Tesla also said that the company will start accepting payments in bitcoin in exchange for its products, subject to applicable laws and initially on a limited basis.