Tesla Sells 75% of Bitcoin Holdings After Musk Says He’s Not Dumping

Tesla Inc. sold a significant portion of its Bitcoin holdings, an investment that helped legitimize the world’s largest electronic currency.

The automaker had converted about 75% of its Bitcoin to fiat currency by the end of June, adding $936 million in cash to its balance sheet, according to its second-quarter earnings letter to shareholders. CEO Elon Musk said on a call with analysts that the company was selling because of uncertainty about when the Covid shutdown will be lifted in China.

“This should not be taken as a judgment on Bitcoin,” Musk said. “It’s just that we were concerned about the overall liquidity of the company given the Covid shutdowns in China.”

Musk, 51, emerged as a major cryptocurrency influencer last year, tweeting positively about Dogecoin and posting photos of his dog Floki, who, like the Dogecoin mascot, is a Shiba Inu. When Tesla held a massive party for its new Austin factory in April, a drone show featured a Dogecoin image.

During an appearance at a Bitcoin conference a year ago, Musk said that the three things he personally owned aside from Tesla and Space Exploration Technologies Corp. were Bitcoin, Ether and Dogecoin. “I can pump, but I don’t dump,” he said.

Tesla first revealed last February that it had invested $1.5 billion in Bitcoin, then announced that it had sold 10% of its stake two months later. Tesla said Wednesday that its digital assets have shrunk to $218 million, and that a Bitcoin writedown dragged on second-quarter profitability.

The cryptocurrency has pulled back from a record high of nearly $69,000 in November. The largest cryptocurrency by market capitalization was down 1.1% at around $22,998 at 11 a.m. in London.

Musk’s embrace of Bitcoin helped act as a catalyst for the digital currency after Tesla briefly accepted the token for purchase. But the company later suspended the payment option, citing environmental concerns surrounding the mining processes. The further retreat marks a hawkish move by one of the crypto sector’s most prominent bulls during what has been termed a “crypto winter.”

Still, Musk continues to position himself as pro-crypto, hinting in recent weeks that SpaceX may join Tesla in accepting Dogecoin for commodity purchases in the future. The CEO said during the automaker’s earnings call that it has not sold any of its Dogecoin.

Shares of MicroStrategy Inc., another major corporate buyer of Bitcoin, were down more than 4% early Thursday. At the end of June, the software firm’s own Bitcoin pile was worth about $3.4 billion less than the previous quarter.

Josh Olszewicz, head of research at crypto fund manager Valkyrie Investments, said rough estimates would place Tesla’s Bitcoin sale at around the $30,000 price level, with $218 million in remaining digital assets on the balance sheet.

“Strongly bearish market conditions since the beginning of the year as well as the need for cash on the balance sheet likely contributed to this decision,” Olszewicz said. “From a financial management perspective, downside volatility may have been too unattractive to ignore in the short term.”

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