Tesla has sold 75% of its bitcoins in a move that has triggered market hysteria.
The sale was seemingly made to prevent a negative cash flow this quarter.
Since the sale announcement, BTC’s price has held steady above $20k
Barely 18 months after Tesla splurged over $1 billion on Bitcoin, the electric car maker has been forced to sell off over 75% of its holdings in what appears to be a mad dash to keep its books in order.
Tesla capitulates and sells its BTC
According to an earnings report filed on Wednesday, Tesla revealed that it had sold 75% of its bitcoin cache. The sale occurred in the year’s second quarter, with the company selling $936 million worth of BTC.
Going into the second quarter, Tesla held only 42,000 BTC. A sale of 75% amounting to $936 million would mean that the company sold each BTC for the average price of $29,000. The figures indicate that Tesla sold the assets before the crypto winter that sent Bitcoin prices to lows of $18,000.
Elon Musk, Tesla’s CEO, told shareholders that “Bitcoin’s impairment” hurt the firm’s profitability as it ended the second quarter with an operating income of $2.5 billion. To balance its books, a sale of assets was necessary that “added $936 million of cash to our balance sheet.”
The markets did not react favorably to the reports, but BTC has held strongly above $20k to trade at $22,867.
BTCUSD Chart by TradingView
As for Tesla’s stock, it closed the day in green as it enjoyed the wave of bullishness that followed the earnings call.
The decision to sell sparked an uproar in the ecosystem as enthusiasts criticized the move to sell for non-bitcoin-centric reasons. “So Elon Musk feels comfortable shilling DOGE to the masses but doesn’t feel comfortable holding BTC and sells for a (rumored) 10% loss after a full round trip,” said DonAlt.
Tesla’s bitcoin romance
Tesla caused a stir after it purchased $1.5 billion worth of Bitcoin to add to its balance sheet in February 2021. The move sparked a bullish run for the asset and was followed by a groundbreaking announcement by the firm that customers could pay for vehicles using Bitcoin.
The honeymoon was not bound to last forever as Tesla made a U-turn and stopped payments for vehicles with Bitcoin. Musk stated that the decision resulted from climate concerns around the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions.”
He added that the company will not sell any of its bitcoins and planned to continue accepting the asset as a payment mechanism when mining operations use sustainable energy sources.