Tesla Sold 75% of its Bitcoin Holdings Worth Nearly $1 Billion in Q2 2022

22. Jul 2022 Posted by Akolkar B on News

Earlier on Wednesday, July 20, electric carmaker Tesla announced that it has liquidated 75% of its Bitcoin holdings during the second quarter of 2022.

 

Tesla said that decision comes as the company was willing to build its cash position owing to COVID lockdown in China during April 2022 when Telsa had to shutdown its Shanghai gigafactory for 22 days.

 

The shut down had severely impacted Tesla’s business as a result of which it had to consider selling down a major part of its BTC holdings to build cash reserves. Elon Musk said that this decision by Tesla should not be seen as a vote against Bitcoin.

 

The Tesla CEO added: “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. This should not be taken as some verdict on Bitcoin. It’s just that we were concerned about overall liquidity for the company.”

 

Amid the global macro uncertainty, Tesla has been beneficing major headwinds and production challenges. However, despite that, the company has managed to sail through better than market expectations as per its Q2 2022 results.

 

Elon Musk added that the company might consider adding Bitcoin to its balance sheet in the future. During the conference call, Musk said the company is “certainly open to increasing our bitcoin holdings in the future”.

 

Interestingly, while Tesla has liquidated a large part of its BTC holdings, it has not sold any of their Dogecoin (DOGE). “And we have not sold any of our Dogecoin,” added Elon Musk.

 

Zach Kirkhorn, the Chief Financial Offer at Tesla said that Tesla booked a small profit on its BTC sale. However, these gains have been completely erased considering the impairment losses through the rest of its BTC holdings. Kirkhorn said that the realized gain is “offset by impairment charges on the remainder of our holdings, netting a $106 million cost to the P&L included within restructuring and other”.

 

While the news has certainly disappointed Bitcoin enthusiasts across the world, Tron founder Justin Sun called it a great news. He laid out three points as his explanation behind this. Sun said:

 

  • Market no longer needs to worry about @Tesla selling BTC which has been haunting us for a long time.
  • Tesla selling nearly 1 BIL USD worth of BTC shows the liquidity of @Bitcoin to all big corps.
  • Tesla completing @Bitcoin transactions shows good precedence for all enterprises holding BTC. We believe more big corps will buy in the future. Kudos to @elonmusk!