Tesla made a $1.5 billion investment in bitcoin at the beginning of last year, relying on what the electric vehicle manufacturer dubbed the cryptocurrency’s “long-term potential.” More than three-quarters of the company’s holdings have already been sold.
In its second-quarter earnings report released on Wednesday, Tesla stated that “As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency,” The corporation reported that these sales increased its cash on hand by $936 million.
Tesla’s CEO Elon Musk, who frequently tweeted about different digital currencies during the run-up to last year, is making a swift retreat.
During the so-called “crypto winter,” which has lasted the past four months, the price of bitcoin has decreased by 50%.
In the first quarter of 2021, Tesla’s fair market value of its bitcoin assets hit $2.48 billion, and it completed the year at nearly $2 billion.
Although the business did not specify the sale price or the amount of the impairment, digital currency entered the second quarter at about $46,000 and ended at less than $19,000.
Earlier this week, Barclays analyst Brian Johnson predicted that given the selloff, Tesla would have a $460 million bitcoin-related impairment.
“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,” Musk said in an earnings call on Wednesday. “This should be not taken as some verdict on bitcoin,” he said, adding that Tesla is open to increasing its crypto holdings in the future.
On the results call, when asked about bitcoin’s potential to serve as an inflationary hedge, Musk responded that Tesla’s top priority is to hasten the switch to sustainable energy and referred to bitcoin as “a sideshow to a sideshow.”
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