A year after Tesla bought bitcoin for $1.5 billion, Elon Musk’s car company has already sold 75% of these coins.
Tesla sells 75% of bitcoin reserves
Tesla’s interest in bitcoin was long dismissed by many as an unnecessary distraction and an afterthought for the company. But when a major covid lockdown in China forced Tesla to close its Shanghai factory within 22 days, they were only too happy that bitcoin is so liquid. Without losing time, Tesla sold 75% of its bitcoin holdings to replenish its cash reserves.
Elon Musk shared the following during the earnings call yesterday:
“The reason we sold some of our bitcoin holdings was that we weren’t sure when the covid lockdowns in China would abate, so it was important for us to maximize our cash position.”
RELATED: Tesla To Sell All Of Its Bitcoin Holdings – Elon Musk Tweets
No judgment on bitcoin
Despite Musk selling bitcoin, he says this does not depreciate BTC:
“This should not be taken as a judgment on bitcoin. It’s just that we were concerned about the overall liquidity of the company.”
Time will tell if he means this, or if he is just saying this to maintain his popularity among bitcoiners.
RELATED: Tesla Could Still Accept Bitcoin As Payment In Future
Bitcoin exchange rate unfavorable for Tesla
In the first quarter of 2021, Tesla’s bitcoins (according to Tesla itself) were worth $2.48 billion at their highest point. By the end of 2021, it was worth about $2 billion. Unfortunately, the company has not shared what average price the bitcoins were sold at, nor is it clear how much Tesla lost on them.
What is clear, however, is that the bitcoin exchange rate at the beginning of the year was nearly 48 thousand dollars, and that at the time of writing the value is about half that.
Analyst Brian Johnson of Barclays estimated earlier this week that Tesla would suffer $460 million in losses if they actually sold their bitcoins.
Bitcoin is a sideshow of a sideshow
Musk said despite Tesla selling BTC, the company is “certainly open to increasing our bitcoin holdings in the future” and has not sold any of its dogecoin. However, when asked about bitcoin’s potential as a hedge against inflation, Musk said Tesla’s main goal is to accelerate the transition to renewable energy, calling bitcoin “an afterthought for an afterthought.”
Fast cars, fast profits
In the first quarter of 2021, Tesla bought bitcoin for billions of dollars. The goal was to become more flexible, diversify, and get returns on its cash. That return was quickly made as Tesla sold 10% as the price rose.
Within a few months, they had cashed in a $101 million profit with this. But Elon Musk said at the time that this wasn’t about the money, but that he wanted to test how liquid Bitcoin is. Right.
Soft diamonds
Last May, Musk said Tesla would stop accepting bitcoin for Tesla cars. There was a lot of public pressure because Tesla presents itself as a sustainable company, and mining bitcoin actually uses a lot of energy. Musk responded by stating that Tesla will not sell bitcoin, they will only stop accepting it.
A week later, Musk tweeted that Tesla has diamond hands.
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