Tesla Withdraws 75% of Bitcoin, After a Year of Crypto Turbulence: NPR
Tesla has pulled back from its $1.5 billion investment in Bitcoin, which it announced in early 2021. Here’s a Bitcoin ATM seen last year inside a store in New York City.
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What a difference a year makes. After making big bets in Bitcoin in 2021, Tesla dumped $936 million worth of the cryptocurrency in the second quarter of 2022, cutting its Bitcoin holdings by 75%, the company said in new investor filings.
Tesla aggressively embraced Bitcoin in 2021, investing $1.5 billion in the currency as CEO Elon Musk highlighted Bitcoin’s advantages over standard fiat currency. For parts of the year, Tesla customers could buy cars with Bitcoin.
But in recent months, Tesla’s profitability was affected by “Bitcoin write-downs,” it said in its second-quarter financial summary.
Bitcoin rose to epic heights in 2021
The closely watched car company’s move led to a wave of interest in the cryptocurrency, with Bitcoin shooting to record highs in 2021. Tesla directly benefited, as it locked in more than $100 million in profits from the crypto investment.
Bitcoin, which is notoriously volatile, was already on the rise before Tesla announced its moves in February 2021. The cryptocurrency’s value quickly rose by tens of thousands of dollars.
Tesla suspended the sale of Bitcoin cars in May 2021, citing the environmental impact of the extensive use of coal and other fossil fuels to mine the cryptocurrency. But after a mid-summer swoon, Bitcoin rallied again in the fall to an all-time high of $68,990.90, according to Coindesk.
The markets have been reshaped since last autumn
From early on, part of cryptocurrency’s appeal centered on its independence from governments, and the promise that it would offer a measure of independence from inflation and politics.
But a war in Europe, rising inflation and a deflated stock market have left Bitcoin vulnerable to very traditional market pressures, as the US Federal Reserve raises interest rates and investors adjust their positions in cryptocurrency and other holdings.
Tesla is just one of those investors, albeit one with vast resources and a CEO who can move markets with a tweet.
A single Bitcoin was valued at more than $24,000 on Wednesday, before Tesla disclosed the sale. As of Thursday morning, the value had fallen well below the $23,000 mark.
