Thursday, July 25, 2024

Tesla sells off 75% of Bitcoin, adds $936 million to company balance sheet.

It seems Tesla Inc. is not immune either to the current market downtrend as it sold 75% of its Bitcoin to add $936 million to the company’s balance sheet. The EV manufacturer had purchased the Bitcoin a little more than a year ago and disclosed a $1.5 billion holding. It highlighted that Tesla had an earnings impairment linked to the digital asset.

Elon Musk adding $1.5 billion worth of Bitcoin to Tesla in 2021 contributed to the crypto market’s euphoria that prompted Bitcoin’s price to explode from $20,000 in December 2020 to $60,000 in March 2021. At one point, Tesla’s reserves of Bitcoin hit a high of $2 billion in value. The company in its 2021 SEC filing had stated that the Bitcoin purchase was meant to provide Tesla more flexibility to further diversify and maximize returns on cash.

Now the market is rumbling about whether Tesla’s Bitcoin sell-off was done out of “necessity” to maintain cash flow or whether it reflects faltering confidence in the popular cryptocurrency. Now Tesla has $621 million in cash. This indicates that it would have been cash flow negative were it not for the $936 million Bitcoin sale.

Musk, during a conference call, said the sale should not be taken as a “verdict on Bitcoin”. He highlighted that the move was due to liquidity concerns given the continued COVID-19 lockdowns in China. The billionaire explained that Tesla sold a bunch of its Bitcoin holdings as it was uncertain as to when the COVID-19 lockdowns in China would alleviate. For the company to maximize its cash position it was important . Musk also said Tesla is open to increasing its Bitcoin holdings in the future.

In regards to Bitcoin being a long-term asset, the Tesla CEO said cryptocurrency was a sideshow to the sideshow of company’s main goal – that is to accelerate the advent of stable energy. He pointed out that cryptocurrency is not something Tesla thinks of a lot.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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