Elon Musk’s Tesla Sold 75% of Its Bitcoin, and Here’s Why

Tesla revealed that it sold around 75% of its bitcoins between April 1 and the end of June. Those sales, which occurred during the second quarter, added $936 million in cash to its balance sheet and were reported as negative impairment, Tesla said in its second-quarter earnings report.

Over the past year, the price of bitcoin peaked around $67,000 in November 2021, and by the end of June 2022 it was trading at just under $20,000.

In February 2021, Tesla said it purchased $1.5 billion worth of bitcoin to diversify its balance sheet outside and maximize returns. Then, in May, Tesla chief Elon Musk decided that Tesla would no longer accept bitcoins to buy its cars, just two months after it began accepting them. Bitcoin price fell more than 4% after Musk tweeted his decision.

$218 million in “digital assets” as of June 30

Tesla’s balance sheet shows the company has $218 million in “digital assets” as of June 30, up from about $1.2 billion in the last three quarters and $1.3 billion in the sequel quarter. ending June 30, 2021.

Presumably most of Tesla’s remaining digital assets are bitcoins, but Musk said on a conference call that Tesla did not sell its Dogecoin. As noted by TechCrunch, Musk said he personally owns Dogecoin, but Tesla has so far not said he owns any.

“We converted the majority of our bitcoin holdings to fiat currency, offset by impairment charges on the rest of our holdings, at a cost of $106 million,” a Tesla representative said on a conference call. with investors.

25% increase in vehicle production

Musk chimed in to explain that Tesla’s decision to convert its bitcoin holdings into fiat currency was not a “verdict” on bitcoin, but that the move was taken to improve its cash flow due to uncertainty over the COVID-19 restrictions in China, which impacted its Shanghai Gigafactory. “The reason we sold off some of our bitcoin holdings was the uncertainty of when China’s COVID lockdowns would ease,” Musk said.

Tesla said total production of Model S and X and Model 3 and Y reached 258,580 in the second quarter, up 25% year-on-year. Total shipments reached 254,695, up 27% year-on-year. However, Q2 production was also down about 17% from the previous quarter and the company delivered 55,000 fewer vehicles compared to the previous quarter.

Tesla said it continues to experience manufacturing challenges due to COVID lockdowns, global supply chain disruptions, labor shortages and “logistical complications, which have limited our ability to operate our factories at full capacity”.

Prices that could drop

Mr Musk also responded to questions about whether the company would cut prices after raising them 10% across its lineup in June due to inflation, as Elektrek reported at the era. In short, maybe, but it depends on inflation and it’s out of his control, Musk said. Due to the six-month to one-year delay between order and delivery, Musk said Tesla had to “anticipate the likely rate of inflation over that period.”

“It is possible that there will be a slight drop in car prices, but it fundamentally depends on macroeconomic inflation.” Musk estimates that inflation will decline towards the end of 2022.

Source: “ZDNet.com”

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