Telsa reportedly sells 75% of its bitcoin reserves. The automobile-making company has sold $936 million of its bitcoin value but the company, however, states that it has not sold any of its Dogecoin.
Telsa Reportedly Sells 75% of Its Bitcoin Reserves
CEO of Telsa as you should already know is an icon within the crypto world and this is partly due to this association with the dogecoin token for a few months in the previous year, he was known as the ‘Dodgefather.’ The reason is also partly due to the fact that Telsa is a major institutional investor in bitcoin.
In the latest earnings report of Telsa which was released on Wednesday, the company revealed that it had sold the majority of its bitcoin: “We have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet.”
The Reason for the Sell-Off
In a subsequent earnings call, Elon Musk explained that the sell-off was related to the ongoing lockdowns in china which is the biggest car market in the world and also the place where the majority of Telsa cars are manufactured and produced.
“The reason we sold a bunch of our bitcoin holdings is we were uncertain as to when the Covid lockdowns in China would alleviate, so it was important for us to maximize our cash position given the uncertainty,” Elon Musk said. “We are certainly open to increasing our bitcoin holdings in the future, so this should not be taken as some verdict of bitcoin. We have not sold any of our Dogecoin, we still have our Dogecoin.”
According to the earnings report on Wednesday, Telsa already has $261 million in cash. This, therefore, means that it would have been the case of cash flow negative were it not for the sale of the $936 million bitcoin.
The Company Invested $1.5 Billion in Bitcoin In 2021
The company made a purchase of $1.5 billion bitcoin and it was revealed in an SEC filing back in February 2021 that it contributed directly to the industry’s euphoria for cryptocurrency made the price of bitcoin surge from its $20,000 to $60,000 in march 2021. The company reserve of bitcoin at some point got as high as $2 billion value. The company in its 2021 SEC filing said that Telsa bought bitcoin to “provide us with more flexibility to further diversify and maximize returns on our cash.”
Dogecoin hit 70 cents last may all due to encouraging tweets from Elon Musk and h token shortly got a marketcap of $70 billion. As of now, it is still not known just how much of Dogecoin Telsa owns. The company’s earnings report however states that it holds $218 million in digital assets and much of that is likely to be the remaining parts of the company’s bitcoin.
Elon Mush Has Always Been Critical About the Crypto Industry
The prices of crypto have fallen aggressively from their previous highs back in 2021. Bitcoin is down by 48% since the start of the year while ether on the other hand which is the second biggest token next to bitcoin is down by 57% since the 1st of January. And at the moment, Dogecoin is sitting comfortably at just over 7 cents.
And although Elon Musk has been praised by the crypto industry, the tech billionaire has made statements that are both touting and criticizing the technology. “Bitcoin is almost as bs as fiat money. The key word is ‘almost,” Musk said in February. “However, when fiat currency has a negative real interest, only a fool wouldn’t look elsewhere.”
And after making the announcement that Telsa would be accepting bitcoin as a medium of payment for its electric cars, Elon Musk reencountered his announcement and said that it would push a pause on such payment options emanating from environmental concerns given into the amount of fossil fuel-fired energy it requires for production.
He tweeted that “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.”