Tesla has sold three-quarters of its bitcoin holdings for about $963 million, becoming the latest investor to bail after the cryptocurrency’s value went into freefall earlier this year.
Bitcoin has slumped by more than 50 percent in 2022, leaving many crypto believers in a financial hole. But your average amateur investor’s losses pale besides those of Elon Musk’s firm, which announced a massive $1.5 billion investment in the cryptocurrency in February 2021.
Tesla’s move into bitcoin legitimized the idea of cryptocurrency for many on-the-fence investors, and the price of each coin, which Market Watch estimates Tesla paid around $38,000 for, jumped to almost $70,000 by November of that year before crashing.
Tesla is thought to have sold each of its coins for approximately $29,000 earlier this year and prices have fallen further since. And in bad news for those investors who haven’t yet sold their own cryptocurrencies, the news of Tesla’s sale of $936 million’s worth of bitcoin caused its value to fall even further this week.
Up in smoke: bitcoin crash has cost Tesla millions
But Musk, who last year told his Twitter followers that “Tesla will not be selling any bitcoin”, suggested the reasons behind the sale are more complicated than they appear.
“We were uncertain as to when the Covid lockdowns in China would alleviate, so it was important for us to maximize our cash position,” the Tesla CEO said on a Wednesday conference call. “We are certainly open to increasing our bitcoin holdings in the future so this should not be taken as some verdict on bitcoin.”
Musk also noted that Tesla didn’t sell any of its holding of Dogecoin, the bitcoin rival that started as a joke, but began to attract serious investment, and which can be used as payment by Tesla customers.
In the same conference call Musk told investors that Tesla’s revenue grew by 42 percent to $16.93 billion in the second quarter of 2022, but profitability took a hit versus the previous quarter due to inflation and more competition for battery cells.