The Q2 earning report of Tesla has come as a shocker for crypto admirers as it stated that the company has reportedly sold its 75% of Bitcoin (BTC) holding.
This news came at a time when cryptocurrency is already trading at its month low, going down by over 50% since last year.
Tesla mentioned in their Q2 earnings report that the company sold 75% of its Bitcoin holdings to maximize its cash position given the uncertainty of the Covid lockdowns in China. They have generated $936M of cash from the sale of Bitcoin.
Why did Tesla sell 75% of its Bitcoin Holding?
CEO of Tesla Elon Musk cited the covid 19 lockdowns in China for Tesla’s significant amount of Bitcoin sell.
During the earnings conference call on Wednesday, Tesla CEO Elon 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.”
He further added that it should not be taken as some verdict on Bitcoin as Tesla is open to increasing its investment in cryptocurrency in the future.
Tesla stated that they have converted approximately 75% of their Bitcoin purchases into fiat currency as of the end of Q2 which added $936 million of cash to their balance sheet.
Tesla hasn’t disclosed the price at which they sold Bitcoins.
Digital Assets of Tesla
In Q1 2021, Tesla showed $272 million worth of cash flow from digital assets in their report.
The company stated that its Q2 year-on-year operating income and profitability were impacted by the impairment of Bitcoin. This could be the reason their digital assets have now shrunk to $218 million which is down from the $1.26 billion in the previous quarter as per the Q2 2022 earnings reports.
Will it impact Cryptocurrency Market?
Tesla is a multinational electric vehicle manufacturer and clean energy company owned by Elon Musk.
Elon Musk has always mentioned Bitcoin as a digital asset with long-term potential via his tweets and interviews.
In February 2021, Tesla bought $1.5 billion worth of Bitcoins when the cryptocurrency was trading above $28,000.
And during a bull rally, they sold 10% of its stake in April resulting in the contribution of $101 million of profit in their Q1 2021 earnings.
After disclosing their holding in Bitcoins in 2021, Elon Musk said the company would begin to accept cryptocurrencies as payment. But shortly after, he suspended this policy citing environmental concerns.
Tesla’s noticeable investment played a huge role in the rapid surge of Bitcoin prices in 2021.
After Feb 2021, Tesla has never made an investment in Bitcoin; but Elon Musk’s tweets related to various cryptocurrencies have always influenced the crypto market.
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