Tesla released its Q2 earnings report, do you think they would sell all their Bitcoin holdings? Included in the report was the following statement. “As of the end of Q2, we have converted approximately 75% of our bitcoin purchases into fiat currency. Conversion in Q2 added $936M of cash to our balance sheet.”
Tesla’s net digital assets were $218 million in the second quarter, down from $1.26 billion in the previous quarter. In addition, the company mentioned the bitcoin impairment impacted its Q2 year-on-year operating income.
Tesla’s cash flows show $936 million in profits from digital asset sales. Q1 2021 was the last time that they had cash flows written in their statement amounted at $272 million.
At the beginning of 2021, Tesla bought $1.5 billion worth of Bitcoin and since then has not accepted anymore. The company never fully publicized how much bitcoin they own; however, Musk mentioned last year that it was close to 42K.
There was a point last year when Tesla was accepting payments in bitcoin. However, this was suspended in May. In October, the company mentioned that they may begin to accept again, with Musk adding “confirmation of reasonable (about 50%) clean energy usage by miner with positive future trend.”
Why did Tesla sell all of its Bitcoin?
Musk explained, “It should be mentioned that 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, given the uncertainty of the Covid lockdowns in China.” He continued, “We are certainly open to increasing our bitcoin holding in future, so this should not be taken as some verdict on bitcoin. It’s just that we were concerned about overall liquidity for the company, given Covid shutdowns in China. And we have not sold any of our dogecoin.”
Tesla never purchased the dogecoin meme cryptocurrency. However, in January, the company started to accept DOGE for specific purchases. Musk previously stated that he considers bitcoin a store of value, whereas dogecoin is better suited for payments.
Tesla stated in a February filing with the Securities and Exchange Commission (SEC) that “We may increase or decrease our holdings of digital assets at any time based on the needs of the business and our view of market and environmental conditions…We believe in the long-term potential of digital assets both as an investment and also as a liquid alternative to cash.”
Currently, Musk is in a legal battle with Twitter Inc. The plan was for him to buy the platform for $44 billion, but he canceled the deal on July 8th. Twitter then filed a lawsuit against Musk for him to buy the platform as originally planned. The lawsuit trial is to happen in October.
For more news updates, visit our homepage now and see our latest news article. Want to learn more about trading? Visit our education page now and learn for FREE!
Elon Musk calls out CEO of Binance(Opens in a new browser tab)
Elon Musk Lets Twitter Decide?(Opens in a new browser tab)