1 year ago
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After the sale of its crypto assets, Tesla said that it wasn’t worried about the volatility around Bitcoin, but it needed extra liquidity thanks to the COVID shutdowns in China where its Shanghai Gigafactory not only services China, but also supports its European and American supply chain.
Tesla became one of the first major companies in the world in 2022 to actively buy cryptocurrencies like Bitcoin and Dogecoin as an asset class. Earlier this year, this strategy turned out to be profitable but amidst the crypto free fall, in its Q2 earnings call, the world’s most valuable automotive company revealed that it had divested 75 per cent of its bitcoin holding. Overall, the company sold bitcoin currency worth $963 million.
In February, Tesla revealed that it had acquired bitcoin worth $1.5 billion. Now after the sale, Tesla believes that its digital assets are worth $218 million amounting to a net loss.
In fact, it was Elon Musk’s announcement that Tesla had acquired bitcoin which had driven the prices of the cryptocurrencies across the world. But due to the crypto free fall, the value of bitcoin and dogecoin has fallen dramatically despite support from the Tesla CEO on social networks like Twitter.
“We are certainly open to increasing bitcoin holdings in future. So this should not be taken as some verdict on Bitcoin. It’s just that we were concerned about overall liquidity for the company given COVID shutdowns in China,” Tesla CFO Zachary Kirkhorn said.
In its Q2 earnings call, Tesla revealed it recorded $2.26 billion in profit and this sell-off of crypto assets hasn’t impacted its stock price.
English (US)