Tesla dumps Bitcoin after Elon Musk said he wouldn’t
Tesla Inc. sold a significant chunk of its Bitcoin holding, an investment that helped legitimize the world’s largest electronic currency.
The carmaker had converted roughly 75% of its Bitcoin to fiat currency as of the end of June, adding $936 million of cash to its balance sheet, according to its shareholder letter on secondquarter earnings. Chief executive officer (CEO) Elon Musk said on a call with analysts that the company sold because of uncertainty about covid shutdowns in China.
“This should not be taken as some verdict on Bitcoin,” Musk said. “It’s just that we were concerned about overall liquidity of the company given the covid shutdowns in China.”
Musk, 51, emerged as a major influencer in cryptocurrency last year, tweeting favourably about Dogecoin and posting photos of his dog Floki, which like the Dogecoin mascot, is a Shiba Inu. When Tesla held a massive party for its new Austin factory in April, a drone show featured a Dogecoin image.
During an appearance at a Bitcoin conference a year ago, Musk said the three things he personally owned aside from Tesla and Space Exploration Technologies Corp. were Bitcoin, Ether, and Dogecoin. “I might pump, but I don’t dump,” he said.
Tesla first disclosed in February of last year that it had invested $1.5 billion in Bitcoin, then announced it had sold 10% of its stake two months later. Tesla said on Wednesday its digital assets have shrunk to $218 million and that a Bitcoin impairment dragged on profitability in the second quarter.
The cryptocurrency has retreated from a record high of almost $69,000 in November. The largest cryptocurrency by market value traded down 1.1% to around $22,998 as of 11 am in London.
Musk’s embrace of Bitcoin helped serve as a catalyst for the digital currency after Tesla briefly accepted the token for purchases. However, the company later suspended the payment option, citing environmental concerns about its mining processes. The further pullback marks a hawkish move from one of the crypto sector’s most prominent bulls during what has been termed as a “crypto winter.”
Still, Musk continues to position himself as pro-crypto, hinting in recent weeks that SpaceX may join Tesla in accepting Dogecoin for merchandise purchases in future. The CEO said during the carmaker’s earnings call that it hasn’t sold any of its Dogecoin.
Shares in MicroStrategy Inc., another major corporate buyer of Bitcoin, traded down more than 4% in early trading on Thursday. At the end of June, the software firm’s own Bitcoin pile was worth around $3.4 billion less than the prior quarter.