Tesla sold more than $900 million worth of bitcoin last quarter, shedding 75 percent of its holdings and prompting the overall market value of the cryptocurrency to drop.
“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,” Musk said. “We are certainly open to increasing our bitcoin holdings in the future, so this should not be taken as some verdict on bitcoin — it’s just that we were concerned about overall liquidity to the company.”
Musk was enthusiastic about bitcoin last year when the company first announced it was investing $1.5 billion in the cryptocurrency, saying on Twitter that the electric car manufacturer would soon accept the digital currency as payment. He said Tesla would not convert its bitcoin received from payments to fiat currency, or paper money.
Tesla’s bitcoin purchase was seen as an investment in the future, a way to invest cash as the company entered a period of consistent profitability. But since its purchase, confidence in bitcoin and cryptocurrency in general has plummeted — and Tesla’s sell-off represents another grim milestone for crypto.
Bitcoin has plunged over the past year as confidence in crypto as an alternative form of currency has waned. Bitcoin values reacted harshly to the Tesla news as well, sinking to near $23,000, as the currency remained sharply below the late-2021 highs of more than $60,000. Tesla purchased its bitcoin when the currency was trading above $30,000.
Tesla recorded a $2.26 billion profit, according to the report, down from last quarter but well above its figure from a year ago.Tesla’s bitcoin sell-off was a boost to its quarterly numbers; the company would have logged negative free cash flow, a figure reflecting money available to spend, if it had not sold the bitcoin.
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