Tesla’s latest quarterly results revealed that the company’s stance on its Bitcoin (BTC) holdings fell significantly over the past three months. Alongside impacts caused by pandemic shutdowns and rising costs of materials and production, BTC’s price was listed as a “primary impairment” on the company’s operating income.
Tesla first purchased $1.5 billion in BTC in Q1 2021, which it disclosed in an SEC filing in early February 2o21, citing asset diversification as the reason for the massive purchase. In March, Tesla announced the possibility of using bitcoin as a payment option for electric cars, only to suspend bitcoin payments for Tesla cars 50 days later due to environmental concerns. This move occurred in mid-2021 for the cryptocurrency, which first peaked in mid-April and reached its final peak around $69,000 in November of that year before starting its current bear market.
In the latest earnings report, it was revealed that Tesla sold 75% of its total BTC holdings during the months of April and June this year. The report cited “Bitcoin weakening” among the reasons why operating income was affected, along with higher material and production costs. However, the company still reported an improved operating income for the 2nd quarter. Although exact sale dates were not provided, this time frame coincided with two major sell-offs in the BTC price, the first fell from $37K to $30K, and the second fell from $30K to $20K per BTC.In the report, Tesla held $1.261B in digital assets on March 31, but by June 30, only $218M remained.According code desk, this sale amounted to $936 million, and Elon Musk has expressed interest in increasing Tesla’s BTC exposure in the future. Musk also reportedly said that Tesla had not sold any of its Dogecoin.
A rocky relationship with crypto
The move to buy BTC for a corporate balance sheet initially seemed like a good idea and followed in the footsteps of MicroStrategy, as the $1.5 billion investment quickly turned into $2.5 billion, only to fall back around its original valuation again after the first bull run ended. BTC corrected by over 40% in the summer of 2021, during which time Elon Musk expressed no desire to dump Tesla’s bitcoin holdings. BTC would go on to print a new all-time high in November 2021, only to start the most brutal bear market in its 13-year history.
This is not the first time Tesla has sold its BTC. It was just after the first peak in April 2021 that Tesla first sold some Bitcoin, resulting in a $100 million profit for the automaker. According to the Q2 report, Tesla appears to have held onto BTC for the year until Q2 2022, when it finally capitulated and sold off most of its holdings.
Tesla’s purchase of BTC and Elon Musk’s appearance on SNL were both seen as “top signals” for the cryptocurrency market in 2021, putting strong bullish pressure on the price during that time. Tesla selling off nearly $1 billion in BTC during the second quarter could have played a role in the massive price selloff during that time, but it’s unclear how the company liquidated its holdings or if it had any effect on the market. While cryptocurrencies have seen a significant uptick recently due to excitement over Ethereum’s upcoming upgrade, it remains to be seen whether BTC will hit the price range many traders are aiming for. One thing that is certain is that Tesla is likely to buy more BTC in the future and if the short-term price predictions turn out to be true Tesla could try to buy the dip.
Sources: Tesla, Coindesk
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