Tesla Sold $936M of Bitcoin, Kept its Dogecoin Reserves
Elon Musk is an icon within crypto. That’s due in large part to his association with the dogecoin meme token — for a few months last year Musk was well-renowned as the “Dogefather” — but it’s also because Tesla is one of the most prominent institutional investors in bitcoin. Or at least, it was.
In Tesla’s novel earnings report, released Wednesday, the company revealed it has sold the greatest of its bitcoin: “We have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet.”
In a subsequent earnings call, Musk described the sell-off was related to ongoing COVID lockdowns in China, the world’s biggest car market and also where many Tesla vehicles are manufactured.
“The reason we sold a bunch of our bitcoin holdings is we were perilous as to when the covid lockdowns in China would alleviate, so it was important for us to maximize our cash spot given the uncertainty,” Musk said. “We are certainly open to increasing our bitcoin holdings in future, so this should not be taken as some verdict of bitcoin.”
“We have not sold any of our dogecoin, we still have our dogecoin,” Musk added.
Tesla has $621 million in cash, according to Wednesday’s earnings portray, which means it would have been cash flow negative were it not for the $936 million bitcoin sale.
Tesla’s $1.5 billion grasp of bitcoin, revealed in an SEC filing in February 2021, contributed to the market’s euphoria for cryptocurrency that brought bitcoin’s price to explode from around $20,000 in December 2020 to $60,000 in March 2021. Tesla’s reserves of bitcoin at one exhibit hit a high of $2 billion in value. Tesla originally bought bitcoin to “provide us with more flexibility to further diversify and maximize returns on our cash,” the commercial said in its 2021 SEC filing.
Spurred in large part by tweets of encouragement from Musk, dogecoin hit 70 cents last May and briefly cooked a marketcap of $70 billion. It’s not known how much dogecoin Tesla owns, concept the company’s earning report states it holds $218 million in digital assets. Much of that is likely to be Tesla’s previous bitcoin.
Crypto prices have proper fallen precipitously from their 2021 highs. Bitcoin is down 48% proper the year began, while ether, the second biggest crypto, has fallen 57% since Jan. 1. Dogecoin is now sitting at just above 7 cents.
Though Musk is championed by bitcoin and crypto communities, he’s made statements both touting and criticizing the technology. “Bitcoin is almost as bs as fiat money. The key word is ‘almost,'” he said in February. “However, when fiat currency has negative real interest, only a fool wouldn’t look elsewhere.”
After announcing that Tesla would procure bitcoin as payment for its electric cars, Musk reneged and said it would cease such payments out of environmental concerns, given the amount of fossil fuel-fired energy its productions requires. “Cryptocurrency is a good idea on many levels and we possess it has a promising future, but this cannot come at gigantic cost to the environment,” he tweeted.
Tesla didn’t Answer to a request for additional comment.
Correction: This story initially misstated the amount of cash Tesla got for its sale of cryptocurrency. The company gained $936 million in cash through the transaction.
