In a never-before move, Tesla sold almost 75% of its Bitcoin holdings amounting to $936 million. The move surprised many because Tesla CEO Elon Musk is regarded as the de facto crypto leader in the market. Tesla’s move should not come as a major surprise, given the circumstances of multiple crypto industry titans declaring bankruptcy due to an unanticipated liquidity problem.
What does Musk have to say?
Elon Musk, the cryptocurrency mogul, opined that this move was not any sort of verdict on bitcoins. As per him, the reason behind this move was the need for liquidation amidst the Covid lockdown in China.
In February 2021, Tesla disclosed that the company invested around $1.5 billion in Bitcoin. However, two months later Tesla had sold off 10% of its stake. The company opined that due to the shrinkage of digital assets to $218 million, profitability was deeply hampered in the second quarter. The value of Bitcoins plummeted by 1.1% this morning.
Although Musk considers himself pro-crypto, he has had a love-hate relationship with Bitcoins and other cryptocurrencies. Tesla’s acceptance of Bitcoins as a mode of payment catalyzed the development of digital currency. However, Tesla suspended crypto payments later citing environmental concerns.
Tesla’s recent move only worsened the pullback giving rise to a phenomenon being termed “crypto winter”. However, this move benefitted Tesla as they were able to add a total of $936 million to their balance sheet at the end of this quarter.