Key Takeaways
- The move was to boost its cash position
- Tesla might buy more BTC in the future, says Elon
- Tesla did not sell any of its Dogecoin holdings.
On Wednesday, leading automotive company, Tesla announced that it sold 75% of its Bitcoin holdings., which was worth about $2bn at the end of 2021. CEO Elon Musk said the move was to boost its cash position, and Tesla might add to its bitcoin position again in the future.
Musk justifying the sell-off stated that they were concerned about overall liquidity for the company given Covid shutdowns in China. He further added that Tesla did not sell any of its Dogecoin (DOGE) holdings.
Tesla stated that its digital assets have shrunk to $218 million and that a BTC impairment hurt its second-quarter profitability. The automaker states it bought traditional currency with the $936m from its Bitcoin sales. Tesla started accepting Bitcoin in late March 2021, then abruptly halted it in May the same year.
In February 2021, Tesla announced that it had made a staggering $1.5 billion investment in the world’s most famous cryptocurrency. The price of Bitcoin soared last year to almost $70,000 in November before crashing to concerning lows in 2022. The price of bitcoin fell about 1.7% before picking up following the release of Tesla’s second-quarter earnings report. BTC is currently trading at $22K.
Musk, in the earnings conference call, called cryptocurrency “a sideshow to the sideshow.” The business mogul has always been a strong proponent of digital assets and crypto in particular. Recently, he hinted at the possibility of his company, SpaceX, joining Tesla in accepting Dogecoin for merchandise purchases in the future.
Elon Musk has long maintained that Tesla will not be selling any Bitcoin. In June 2021, however, Musk admitted that Tesla sold 10% of its holdings to confirm BTC could be liquidated easily without moving the market. Last year he also said, “If the price of Bitcoin goes down, I lose money. I might pump but don’t dump.”
The business mogul’s public statements on Bitcoin have often led to crypto price manipulation. In 2021, Bitcoin prices climbed above $32,000 after trading below the $30,000 level following billionaire Elon Musk announced that his space exploration company SpaceX also owns the digital token and has no plans to sell it.
In 2022, Bitcoin has faced various obstacles, including an extremely volatile bear market, stepped-up regulatory scrutiny in China, Europe, and the U.S., and environmental concerns about the energy needed by the computers underpinning it. BTC plummeted over 70% from its record high in November, with around $2 trillion wiped off the value of the entire cryptocurrency market. Last month, the public miners sold almost 25% of their bitcoin holdings, liquidating about 14,600 bitcoin.
